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Tariffs on China's Tires and Revisiting Smoot-Hawley | PowerOptions Web Log
Protectionism sells well in a climate of fear, but it’s hardly a base for economic policy. After US President Barack Obama’s announcement on September 11 of a 35% tariff on Chinese tires, he immediately downplayed the possibility that the measure will spark a trade war with America’s second largest trading partner. In an interview with Bloomberg News, the president argued that existing trade rule must be enforced to build support with lawmakers and the American public. The White House enacted the tariff in reaction to a petition by the United Steelworkers Union against China for flooding the US market with “entry level” tires. Domestic industries, especially mature ones, asking the government to enact shortsighted protection from foreign competition are nothing new. Following a Wall Street crisis that spread rapidly to the greater economy, the infamous Smoot-Hawley Act of 1930 raised tariffs on a basket of foreign goods. European agriculture was...