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An update on a post I did last week on the Obama administration’s swing toward trade protectionism with its action against Chinese tires: enclosed is this nicely written NYTimes editorial…not an Op-ed, an editorial.
The Times editorial board understands economics. American workers in the tire industry, many represented by the United Steelworkers Union, may well lose their jobs with or without the new 35% tariff against Chinese tires. The reality about trade, the Times points out, is that Americans will likely buy low-cost tires from other countries in any case, perhaps in Latin America, rather than from American factories. These Latin tires will cost more than the Chinese variety, making American consumers worse off.
The Economist article I attached to the last post included a comment from an analyst suggesting that President Obama, by imposing these tariffs, is shoring up his left flank in order to achieve support for health care reform, that $900 billion budget-buster. Maybe the linkage is far-fetched, but if true, putting at risk the global trading system in order to expand entitlements, is that what sound economies are built on?
I hope the president deploys his considerable charm and intellect next week, talking things out with Chinese President Hu Jintao at the G-20 Summit in Pittsburgh in order to avoid a nasty trade war. That venue would likewise be a fine place for the president to tell the truth to Rust Belt workers, the truth John McCain started telling in Michigan last year: that the economy is in transition, we cannot artificially protect manufacturing jobs, job training and outplacement will be required. The higher value-added, knowledge-based economy beckons…
