US Chamber Slashes Obama’s Decision on Tires

Friday, September 18, 2009 11:01
Posted in category The Big Picture

Last week, when President Obama signed off on the new tariffs on imported tires from China, an immediate response from China followed.  In short, the action take was protectionist, without merit, and they had the data to support it.  It was a reaction that indicated to me that, they had their ducks in a row.  And spreadsheets in tow.

In recent comments, Thomas Donohue, head of the US Chamber of Commerce added some color to the picture that is now hanging on the wall of the Oval Office.

“This is an agreement we made when the Chinese went into the WTO,” Donohue said. “At the time we were making low-end tires. We don’t make low-end tires in this country any more; it’s not a competitive business for us.”

Although Obama isn’t applying all the penalties he could, Donahue said, “Most people didn’t want to pull that trigger for the simple reason of getting into a trade war, because we don’t make the tires any more. What’s going to happen is the price of tires is going to go up and people may lose their jobs because of this.”

.. and why is he saying this?  why is he worried?

Chinese retaliation could hurt U.S. auto companies, which last year agreed to export more than $2 billion in vehicles and auto parts to China, including thousands of Michigan-made vehicles and transmissions.

.. which aren’t the only only trade relationship(s) that may be at risk

Donohue urged the Obama administration to complete pending trade deals with Columbia, Korea and Panama, as well as finishing the stalled Doha Round agreement with the WTO.

He noted that a Chamber study found more than 380,000 U.S. jobs and $40 billion in potential export sales are at risk if the trade agreements aren’t completed

[…]

The U.S. chamber study also forecast another 120,000 potential lost jobs from ongoing problems over cross-border trucking with Mexico and possible foreign retaliation against “Buy American”

Now, without getting into the politics of this particular issue, my concern here is that we are still facing what is a systematic gap in reasonable knowledge, understanding, and decision making when it comes to the global economy.  It is an issue I wrote on when questions how trade statistics were being measured and used in policy in today’s environment, and how arbitrary the application of different policies could become.

In short, the system isn’t a system, or at the very least the system is not functioning as one, and as a result the credibility of the system is diminished.

It is an issue (tires) that in the short term leads to a situation where two leaders question each other in the open, support the case for the opposition, and show a clear need for changes to be made in how issues will be addressed going forward.

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One Response to “US Chamber Slashes Obama’s Decision on Tires”

  1. Jay Boyle says:

    September 20th, 2009 at 6:51 am

    Obama must be pandering to the trade unions in order to shore up the health care vote. No one can be this short sighted.

    Not only should he be working on the auto parts market access to Chinese Markets but the market for wind turbines and other clean energy technology is being blatantly protected in China.

    Jay