Obama the Protectionist

[August1991]

The Obama administration will put steep import duties of 35% in the first year on Chinese passenger and light truck tires, responding to what the U.S. International Trade Commission determined to be a surge of Chinese tire exports that has rocked the domestic U.S. tire industry and displaced thousands of jobs, U.S. Trade Representative Ron Kirk announced Friday night.

....

President Barack Obama campaigned for the presidency using tough trade rhetoric and appealing to union workers. He said he would renegotiate the North American Free Trade Agreement to incorporate stricter labor and environmental standards. And he said China must abide by the rules of the WTO or face consequences.

....

President Obama's action stands in contrast to that of his predecessor. President George W. Bush rejected four ITC recommendations for tariffs against China.

WSJ

I think that Obama has decided that unionized steelworker support for his health care package is more important than US buyers of tires.

I also think that Harper should support China in protesting this import tariff. I hope this is not an indication of future US trade policy.

[kimmy]

WSJ

I think that Obama has decided that unionized steelworker support for his health care package is more important than US buyers of tires.

I also think that Harper should support China in protesting this import tariff. I hope this is not an indication of future US trade policy.

He talked "making trade work for America" (or some such) during the election campaign, and people voted for him. If people weren't comfortable with tariffs on imports, they should have voted for the other guy.

-k

[August1991]

China's Ministry of Commerce has announced moves toward launching anti-dumping measures against automotive and chicken products imported from the US. The timing shows it undeniably to be a retaliatory measure after President Barack Obama's September 11th decision to levy tariffs of up to 35% on China's huge exports of tires to the US in a previous anti-dumping case.

Link

Ugh.

Harper has to say something about this in Washington this week. It's certainly going to be discussed in Pittsburgh the week after.

----

Here's a brilliant little analysis of the tire tariff:

Let's see... 250 million cars in America... need 4 tires per car... need new tires every 2.5 years. 400 million tires a year... $1.4 billion dollars a year... 10,000 worker jobs saved... $140,000 dollars per worker-job per year.

Looks like we could (a) let the Chinese sell us tires, ( tax each tire by $2.50, © pay each tire worker who loses his or her job $100K a year, and we come out ahead: American households have more money to spend on other things, China has more jobs to help what is still a very poor country grow, and tire workers have higher incomes and more leisure as well.

But, you say, it would be stupid to impose a $2 a tire tax and use the money to pay each laid-off tire worker $100K a year.

That's the point: when the policy you are adopting is worse for everybody than a policy you agree is stupid, the policy you are adopting is best characterized as really stupid.

Brad DeLong Edited September 14, 2009 by August1991

[Pliny]

Hoover and Roosevelt did the same thing in the great depression and prolonged it by at least eight years.

It doesn't help.

The problem with Obama is that he isn't specific in what he says. If he said he would "make trade work for America". What exactly did he mean? Should it be tacitly understood and assumed he meant tariffs on foreign trade.

[Oleg Bach]

Domestically we need protectionism. It is good for the average person - those not wanting it..are the 1 per centers..full of greed and arrogance - example - How the hell did China suddenly own all of America on paper? It was not protectionism that brought this about - it was the selling out of America by a greedy elite - NOW even these pigs have learned the lesson _ If you do not take care of your own and your own home base - you end up like Conrad Black - family first - protectionism is good.

[Guest RossP]

Domestically we need protectionism. It is good for the average person - those not wanting it..are the 1 per centers..full of greed and arrogance - example - How the hell did China suddenly own all of America on paper? It was not protectionism that brought this about - it was the selling out of America by a greedy elite - NOW even these pigs have learned the lesson _ If you do not take care of your own and your own home base - you end up like Conrad Black - family first - protectionism is good.

Amen to that brother

[Hobble]

Couldn't Canada merely strengthen relations with other nations by increasing trade with them if the U.S. is beginning to shut us out?!?

[Topaz]

Couldn't Canada merely strengthen relations with other nations by increasing trade with them if the U.S. is beginning to shut us out?!?

Canada should have started to trade with more countries years ago but didn't. It is refreshing to see a leader in the west defend its countries maufacturing sector. Canada has no hope for that here, we just see all the jobs go to Mexico, India and China. The only sector Harper fights for is oil and gas.

[bush_cheney2004]

Canada should have started to trade with more countries years ago but didn't. It is refreshing to see a leader in the west defend its countries maufacturing sector. Canada has no hope for that here, we just see all the jobs go to Mexico, India and China. The only sector Harper fights for is oil and gas.

That's OK....Canada didn't seem to mind when US jobs were exported north.

I think I will phone our call center today!

[Hobble]

I heard somewhere that relations/trade was improving between Canada and Brazil... Am I correct? Sorry, I am slightly under-informed on these issues

[dre]

Both Canada and the US should do business with countries whos behavior we support.

Our current trade policy is creating a totalitarian communist super-power, and we are going to seriously regret it when all is said and done.

[lictor616]

Both Canada and the US should do business with countries whos behavior we support.

Our current trade policy is creating a totalitarian communist super-power, and we are going to seriously regret it when all is said and done.

I agree with that

[Pliny]

Domestically we need protectionism. It is good for the average person - those not wanting it..are the 1 per centers..full of greed and arrogance - example - How the hell did China suddenly own all of America on paper? It was not protectionism that brought this about - it was the selling out of America by a greedy elite - NOW even these pigs have learned the lesson _ If you do not take care of your own and your own home base - you end up like Conrad Black - family first - protectionism is good.

Who does protectionism protect?

Protectionism is basically about government placing a tariff on foreign goods which is seen to "protect" the domestic industry from those lower cost foreign goods. Under these circumstances the consumer is not "protected" from high prices. While trade tariffs increase government revenues and high paid workers are guaranteed their paycheques are there any other benefits? I don't think there are.

Firstly, protecting the industry's prices domestically does not help the industry to export it's goods. They are too high priced. Unless the domestic market is enough to keep the domestic industry alive it won't last long. This protectionism does not protect against quality either. Tariffs may bring the price of imported goods to the level of the domestic market but the protectionist action generally leads to an attitude of unwarranted superiority resulting in a drop in quality of the domestic porduct. Quality is the only means to overcome the trade barrier that tariffs put up. Since the "protected" industry feels safe it does not see the need to innovate or be competitive. Foreign imports can only gain a share of the market by improving quality and they do.

The immediate downside to tariffs is the increased cost to consumers and the inability of the domestic industry to export to foreign markets which limits it's ability to hold a position in the international market. The long term downsides are a stagnant domestic industry that inevitably requires government subsidy to sustain itself, Corporate welfare, as it were.

Protectionism is a form of welfare, Oleg. You have argued against individual welfare so I can't see why you would argue for it regarding trade? Economically, the same pitfalls occur on an individual level as they do on the collective level.

Microeconomically and macroeconomically government intervention in the form of favour and privilege for one leads to the same pernicious end. It mitigates the "struggle" to survive leaving it's recipients to languish in it's largesse as cattle put out to pasture. If this is how life should be perceived then all is good and tariffs are a welcome benefit - but, in my view, they only seem to benefit a few and not the good of all. And being the lefty liberal that I am I think we should all be treated equally.

[Oleg Bach]

Protectionism is a beautiful thing. IF you have a land mass that can sustain the populace in good comfort..food supplies - tools and transportion and fuel. You really don't need anything else if you have these- BUT and there is always the butt...those that don't like protectionism are those that think of themselves and gathering more and more unlimited useless wealth. Economic habitualists that no nothing other than the stimulation of consumerism and a continued contempt and loathing of the consumer that keeps them fabulously wealthy and powerful. If America was more protectionist - 9 11 would not have happened nor would the facilitation of Muslim hate absortion for profit. A patron or father of a nation is duty bound to protect the national family - these buisness elite are not interested in the welfare of common Americans. They are a very disloyal bunch. Who expect our loyalty but are not willing to grant us their own.

We don't need more mindless wealth - we need better management of resourses and the avoidance of continued assualt of cold blooded profiteers. For instance - we do not need CHINA...That backward nation needs us. They are traitors who continue to endebt us for the purpose of continued damageing wealth and a sense of sick glory.

[bush_cheney2004]

....Our current trade policy is creating a totalitarian communist super-power, and we are going to seriously regret it when all is said and done.

Canada's past trade policy helped to create a democratic, thermonuclear super-power with far more demonstrated reach than China, which would still have trouble invading Taiwan.

[Oleg Bach]

Canada's past trade policy helped to create a democratic, thermonuclear super-power with far more demonstrated reach than China, which would still have trouble invading Taiwan.

What? We are more bad ass than America? Don't worry - once Hilary with her mislead Trotskyism is done - Somalia will have the bomb...and she will have a mink lined bunker.

[Pliny]

Protectionism is a beautiful thing. IF you have a land mass that can sustain the populace in good comfort..food supplies - tools and transportion and fuel. You really don't need anything else if you have these- BUT and there is always the butt...those that don't like protectionism are those that think of themselves and gathering more and more unlimited useless wealth. Economic habitualists that no nothing other than the stimulation of consumerism and a continued contempt and loathing of the consumer that keeps them fabulously wealthy and powerful. If America was more protectionist - 9 11 would not have happened nor would the facilitation of Muslim hate absortion for profit. A patron or father of a nation is duty bound to protect the national family - these buisness elite are not interested in the welfare of common Americans. They are a very disloyal bunch. Who expect our loyalty but are not willing to grant us their own.

We don't need more mindless wealth - we need better management of resourses and the avoidance of continued assualt of cold blooded profiteers. For instance - we do not need CHINA...That backward nation needs us. They are traitors who continue to endebt us for the purpose of continued damageing wealth and a sense of sick glory.

I am sorry but I must disagree with your position entirely.

Protectionism is an enforcement and does exactly as it says "protects" domestic manufacturing. It doesn't sound like you read my post at all.

You post here states that "those that don't like protectionism are those that think of themselves and gathering more and more unlimited useless wealth". Quite the contrary, it is all about "protecting" the already gathered "unlimited useless wealth".

You say we need "better management of resources and the avoidance of [the] continued assault of cold-blooded profiteers". Who do you think is already managing the resources and do you think they deserve to continue to do so? The best way to manage resources is through private ownership of property not collective ownership where one individual can make the decisions for everyone regarding the resources. Ownership is the best method of protection - no one has a more vested interest to protect than an "owner". Instituting laws to protect only protects the current owners of wealth. A person that mismanages his wealth and thus his resources and property should face the consequences of loss. If he is protected by protectionist laws and tariffs it means the resources are being ill managed and managers need to change hands. The mismanagement of resources on a collective level, meaning all resources will suffer under mismanagement from a singular authority, is far more damaging than mismanagement could ever be on a private level since no one person will own everything. I am not saying that mismanagement will not occur. I am saying it will be less damaging with far more chances of correction. The correction of mismanagement of resources under a single authority, i.e. the State, is almost impossible as long as the State remains that authority. It is never held accountable until it is overthrown. You need only have visited East Germany or Poland prior to 1989 to see the blatant mismanagement of resources that occurred under their form of "protectionism".

What your description of proper management elicits is a people looking after themselves through a totalitarian fascist state.

If by "protectionism" you mean protecting the sanctity of person and property I am for that but let's not confuse that with protecting the mismanagement of resources under private ownership. The necessity of protectionist laws means that the future ownership of the production of wealth is guaranteed under already proven poor management practices.

[Oleg Bach]

Family first. Friends second - enemies last. Don't tell me that they guys that live and prosper within our system that signed trade deals with China, Japan, India and so on did us a favour. These guys removed our protection - a small group did well with non-protectionist policy...but we did not...look at GM - they could have continued to sell us bad product and kept thousands employed - If we were not exposed to better cars we would not have known the difference...GM cars were GOOD ENOUGH. So we got better asian cars and lost our jobs...I think that being protected would have been better - to drive a Ford and eat then drive an import and not eat.

[ft.niagara]

Microeconomically and macroeconomically government intervention in the form of favour and privilege for one leads to the same pernicious end. It mitigates the "struggle" to survive leaving it's recipients to languish in it's largesse as cattle put out to pasture. If this is how life should be perceived then all is good and tariffs are a welcome benefit - but, in my view, they only seem to benefit a few and not the good of all. And being the lefty liberal that I am I think we should all be treated equally.

Trade is great as long as it is balanced. Once it is imbalanced, someone falls into debt to another, and soon there is no way out. The bottom line is if people, families or countries can not live within a budget, bad things happen to them. Pretty soon, you have sold your soul to your own glut.

[Born Free]

Family first. Friends second - enemies last. Don't tell me that they guys that live and prosper within our system that signed trade deals with China, Japan, India and so on did us a favour. These guys removed our protection - a small group did well with non-protectionist policy...but we did not...look at GM - they could have continued to sell us bad product and kept thousands employed - If we were not exposed to better cars we would not have known the difference...GM cars were GOOD ENOUGH. So we got better asian cars and lost our jobs...I think that being protected would have been better - to drive a Ford and eat then drive an import and not eat.

The real incentive should be to build a better GM car and at a lower cost.... One can blame GM's top management for not being successful at that. Perhaps they were too busy doing other stuff...