Chinese workers load tires for export. Source: www.financialpost.com
During the Great Depression, international trade contracted by a third, as countries around the world erected barriers to trade, aggravating a sharp decline in output already under way and throwing millions out of work. Thus far, in the Great Recession of 2008-09, the end of which some observers may have called too soon, the major powers have avoided trade protection. Enter the Obama administration.
Last year, I published a piece calling for those supporting Democrats in America’s national elections to make sure they keep the Dems honest on trade. Concerns about Obama’s commitment to free trade, due to his campaign strategy in Midwestern states last year, were dismissed as mere election-year politics. His commitment to satisfying his friends in America’s trade unions is now abundantly clear, not only because he parrots their unfair accusations about abuses by the Colombian government, but also in the latest action by the Obama administration to raise tariffs against Chinese tires (see NYT imes article).
Trade wars can spiral out of control, even if this is not the original intention of protectionists. During the 19th century, Britain, the unrivaled power at the time, ensured global prosperity through its commitment to free trade. The U.S. since 1945 has played this role, through both Democratic and Republican administrations. Doubts about President Obama’s commitment to free trade, a key pillar of international cooperation and a key strategy for broad-based global prosperity, have re-emerged, a point quite ably discussed in this Economist article.
Photo: Chinese workers loading tires for export. Source: www.financialpost.com
