Obama wrecks trade

Spinnaker

Ghosts from the 2008 campaign trail have begun to rear their ugly heads. What most experts considered simple rhetoric, especially concerning trade policy, are now coming to fruition.

President Barack Obama in typical, politics-as-usual manor announced at 10 p.m. on a Friday — the news dumping ground of the week — that he would be instituting an archaic protectionist stance against global trade: tariffs.

Obama has decided to support union bosses, to the detriment of Main Street, by enacting a 35 percent import tax on all Chinese produced tires, on top of the 4 percent import duty already mandated.

The move won’t help U.S. producers because as profit seeking entities, they were the ones who exported these jobs across the world for cheaper labor. So they will simply move to another nation to continue to save costs.

It also won’t help the U.S. worker, as previously stated; the jobs will only shift to another lesser-developed nation. And most importantly, it will not help the cash-strapped consumer. Most experts have said that with the removal of 17 percent of U.S. tires from the market, prices will inevitably rise.

“I think within the next 60 days you’ll see some pretty significant price increases,” said Jim Mayfield, president of Del-Nat Tire Corp. of Memphis, a large importer and distributor of Chinese tires, in a Wall Street Journal interview.

He said he also estimates prices for “entry-level” tires will increase 20 to 30 percent.

Most believed former President Bill Clinton had finally resolved the question about tariffs: low tariffs and free trade among willing partners was mutually beneficially to all participants.

However, Obama, while in the middle of re-writing financial regulations, deciding the fate Afghanistan and considering a complete overhaul of the health care industry, has now decided to impose tariffs on America’s largest creditor.

Forget for a second that free trade has helped America and the world increase economic activity, increase cultural diversity and increase the purchasing power of the world’s poor. Why is he starting a trade war with the largest nation willing to let America continue to run-up debt to fund the welfare-warfare society?

To date, the fiscal deficit for 2009 alone totals about $1.4 trillion, a $1 trillion dollar increase over the largest deficit budget ever, according to a Wall Street Journal study. Of that, China is the largest purchaser of both short- and long-term Treasury bills and bonds.

However China decides to handle that powder keg waiting to explode is uncertain, but it appears that China is going to begin retaliation by imposing trade quotas and tariffs on U.S. automobile and poultry exports.

Essentially Obama chose one industry, the American tire producers, over another, U.S. farmers.

Actions like this only further distort the market, not to mention how unfair it is to have bureaucrats decide which industries are to succeed or fail.

If Obama has any hope of averting a 1930s style trade war with the world, he will need to deny similar requests from other unions and producers.

Obama will need to decide between helping favor-seekers or prospects for economic growth and an end to the global recession.

But I’m not holding my breath.