In an economic debate measured by staggering
multibillion-dollar sums and unemployment figures logging in the hundreds
of thousands, the stakes in the rubber tire import dispute with China seem
The government's International Trade Commission reported that a surge
of Chinese exports of low-cost tires has cost U.S. workers 5,000 jobs. On
the basis of that report, President Obama slapped tariffs, beginning at 35
percent, on Chinese-made tires.
By itself, the issue seems hardly important. But like a pebble in the
shoe, the irritation it has caused and the ramifications of the dispute may
have greater consequences.
The case against the imports was filed by the United Steelworkers
Union, an important political ally of the president and congressional
Democrats especially those Obama is laboring to keep on board for his
landmark health care legislation.
Many in business fear that this is just the opening round in what
could become a much larger and more dangerous trade war.
For now, the Chinese have threatened only minor retaliation, a cutback
in auto and chicken parts from the U.S. But both sides have plenty of
other, larger weapons they could deploy.
Obama told a Wall Street audience this week that is not where he is
headed. He noted that the Chinese had agreed, as part of the negotiations
allowing entry into the World Trade Organization, that the U.S. could clamp
down on "surges" of imports, without having to prove unfair trade
practices. The surge is real a tripling of tire imports in a few short
years and Obama said he is simply enforcing the rule the Chinese had
But as always with trade disputes, the story is more complicated. Most
of the Chinese tires that will be penalized are made in four American-owned
factories over there. American tire manufacturers have moved to the high
end of the market. The likelihood is that if the Chinese imports are
blocked, other low-wage foreign countries will replace them.
The larger question is what this decision tells us about Obama's
approach to trade. In the campaign, he was deliberately murky, promising to
expand exports but at times endorsing plainly protectionist measures. Since
the election, we have heard nothing about his demagogic promise to
renegotiate the North American Free Trade Agreement. But his administration
has not pushed for action on pending trade agreements left over from the
George W. Bush years.
Bill Clinton was similarly mushy at the start, but in the end became a
strong advocate of expanded world trade. The powerful forces reshaping the
international economy will probably push Obama in the same direction. But
his party is increasingly skeptical about the benefits of trade, and he is
likely to duck and dodge more than he sets a straight course.
The danger is that once you strike the first blow against foreign
competitors, you can't tell what will happen next. Obama has taken that
risk, so fingers are crossed.