US goes more protectionist

September 13th, 2009 at 11:20 am by David Farrar

Sad to read in the HoS:

President slapped punitive tariffs on all car and light truck tyres entering the from in a decision that could anger the strategically important Asian powerhouse but placate union supporters important to his health-care push at home. …

The federal trade panel recommended a 55 per cent tariff in the first year, decreasing 10 per cent in each of the next two years. Obama settled on an extra 35 per cent in the first year, reducing by 5 per cent for two years. Beijing yesterday sharply condemned the US move: “China strongly opposes this serious act of trade protectionism by the US.

“This act not only violates the rules of the World Trade Organisation but also violates the relevant commitments made by the US Government at the G-20 financial summit.”

Protectionism may sometimes deliver short-term gain, but at the expense of long-term pain. NZ is a sterling example of this as we got rid of almost all tariffs and subsidies, yet up until the global recession had the lowest unemployment rate in the OECD. Protectionism doesn’t save jobs in the long-term, it merely keeps capital locked up in relatively inefficient industries.

To be fair to Obama, Bush was also a protectionist despite his rhetoric. He slapped tariffs on regularly, against rules. They know they will lose at the eventually, but do it to get through the election.

It is a pity, in terms of trade policy, that did not win. He was a very sincere and dedicated supporter – his policy was to remove barriers to trade with every country on Earth, except those they have security issues with.

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8 Responses to “US goes more protectionist”

  1. heisenbug (7 comments) says:

    Bush may have slapped on tariffs in some areas, but he declined four times to apply tariffs to Chinese goods under this particular law (which leaves it up to the President). This is a purely political decision that benefits Obama, his program, and his cronies, and harms the US in a number of ways. Read all about it here: http://lincicome.blogspot.com/2009/09/in-announcing-tire-tariffs-obama.html or follow the links from Not PC.

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  2. Viking2 (11,220 comments) says:

    And of course China doesn’t have “trade” barriers?
    Interesting that NZ exports to China have grown sharply since the signing of our non tarrif trade agreement.

    And we can’t exactly export whatever we want into the States without various barriers in our way. Australia neither.( recall apples)
    Unemployment is not a function of trade tarrifs but the standard of living is. So the yanks have just increased the cost of their standard of living. Now that may make a few more Chinamen unemployed and a few more Philipino sailors but the net effect on their standard of living will be minor in the scheme of things. More importantly for the Americans it says that they consider Americans have a first right to their production and the taxes they need to collect along the way to maintain their standard of living.
    So much of their production is offshore that unless they reverse that trend America will inevitably go bankrupt form imports. That’s aside from their efforts with their banking system. NZ is not that far behind except that we do export a lot for a small country. Just not enough yet.

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  3. Kimble (4,393 comments) says:

    It looked for a while that we were all past this silly, childish protectionism.

    It seemed like people were starting to realise that tariffs and quotas were just forms of corporate welfare.

    So much for Obama’s “Change”, which is now confirmed as nothing but “reversion”.

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  4. Johnboy (15,390 comments) says:

    Ho Hum—different colour— same feller—what a surprise—yeah right.

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  5. Viking2 (11,220 comments) says:

    Economic Nostradamus fears another bust

    * By Angela Harper
    * From: AAP
    * September 13, 2009 11:26AM

    HE could be the modern-day Nostradamus of the finance world.

    In his books he predicted the dot.com and housing market crashes.

    Investment banker turned author, John Talbott, is accusing big business of bribery and predicts another crash is just around the corner.

    http://www.dailytelegraph.com.au/business/economic-nostradamus-fears-another-bust/story-e6frez7r-1225772339621

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  6. side show bob (3,660 comments) says:

    “NZ is a sterling example of this as we got rid of almost all tariffs and subsides, yet up until the global recession had the lowest unemployment rate in the OECD”. Perhaps this has wider lessons the just trade. NZ went through a lot of pain when we were pulled off the tit of subsides. As a farmer I remember my old man shaking his head when a fair hunk of income disappear but as you say it was the best thing that could have happened. Would I be to bold to suggest that thousands of welfare recipients would also benefit from similar treatment. I know there is at least one poster on Kiwiblog that would benefit from such a move.

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  7. adamsmith1922 (889 comments) says:

    yes DPF Bush did put on some tariffs, but in this case Obama has yielded to requests to use S421 which Bush always resisted

    Obama is treading a very dangerous path, bearing in mind that at the March G20 he and the others yet again said they would resist protectionism.

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  8. KiwiGreg (3,211 comments) says:

    Note that the tyre manufacturers didnt want this tarriff – its straight pay back to the Steelworkers. So Americans get to pay more for tyres so a few cossetted unionists can keep $80,000 “jobs”. Note also China will hit back.

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