Tire Tariffs

I am very intrigued by the new tariff issued by the United States on tire imports from China. According to the Financial Times, Barack Obama issued a new order creating a 35 per cent tariff on tire imports. Obviously this economic decision, which was issued in an attempt to spark US economic growth, specifically in the automobile industry, has far reaching political ramifications.
China’s minister of commerce, Chen Deming, stated that the tariff “send a wrong signal to the world,” and he believes that China and America should work together to combat the current world-wide economic problems. I actually agree with Deming. Even if the current increase in the number of Chinese-made tires have led to a decrease in thousands of job losses in the US auto sector, I believe that the world’s two greatest economic powers should work together to combat the current economic crisis.
I believe that this poor decision on President Obama’s part could lead to retaliation from China. The Peoples Republic of China has already stated that it would “investigate imports of US poultry and vehicles,” and if China decides to issue retaliatory economic sanctions, we could enter an economic war with America’s greatest trading partner. China has already decried the tariff as a “serious act of trade protectionism,” according to the Wall Street Journal.
The Obama administration bases the tariff on the United States International Trade Commission’s, or ITC’s findings that the Chinese export surge in the tire market is unfair, and does not follow WTO regulations, according to the Wall Street Journal. The Journal also comments how Obama’s reaction is in “stark contrast” to the way George W. Bush handled the ITC findings and recommendations, while Obama listened to the report, Bush rejected four separate calls for increase in tariffs.
I think that this tariff may help the American economy initially, and may even increase some jobs, but I think that the political ramifications may eventually harm the American political and economic scene. We do not want to get into an economic war with China, especially during a period of time when the US economy is not at its strongest, and with the dollar plunging against other currencies. Even if the tariff would give a temporary boost to the auto industry sector of the economy, personally, I do not feel that it would be worth the risk. The potential negatives from the tariff far outweigh the potential positives.
The biggest callers for the tariff were different American Trade Unions, which illustrates the view I already hold for much current day Union activity, that these Unions, rightly or wrongly, only look out for their own good, and not the good of the American economy as a whole.
I hope that this misguided tariff does not do more harm than good for the US economy, although I feel that this may be the case. Even if the surplus of low cost Chinese tires entering the market is unfair and goes against WTO regulations, I feel it would be a much better move to discuss that grievance during either the upcoming G20 meetings, or Barack Obama’s upcoming visit to China. I feel that this direct and sudden economic action will negatively affect America’s political and economic relationship with China, at a time when it would be very unfortunate to do so.


http://online.wsj.com/article/SB125283952859406521.html#mod=WSJ_hpp_MIDDLTopStories

http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html