Myths Of Protectionism: Stories You Are Likely To Hear In The Wake Of The China Tire Trade Tariff

President Obama has decided to enforce our trade laws and imposed a 3-year tariff on Chinese tires. I suspect the country is about to witness a corporate hissy fit that will surely rival any righteous teabagger’s demands to see the President’s birth certificate.
Here is what is going on: when the US endorsed China entering the World Trade Organization the agreement was that if any of our industries were significantly disrupted, we could call “time out” and give those industries 3 years to adjust. In case after case President Bush refused to enforce this agreement as China took over one industry after another. Since we then had to buy what we used to make, our balance of trade deteriorated and we now owe China vast sums.

In this case the U.S. International Trade Commission found that America’s tire industry was, to say the least, disrupted by a surge of imports of cheap tires. As with so many industries, cheap Chinese imports quickly dominated the market, American factories closed, American workers were laid off, American communities were devastated and instead of having to pay wages and maintain factories, American CEOs and Wall Street executives pocketed more and more short-term profits at the long-term expense of their own companies and our country's economy.

So this time President Obama is enforcing the agreement and applying tariffs. In fact he is applying a lower tariff than the 55% that was recommended, but the tariff of 35% is still substantial and may save jobs, preserve some manufacturing capacity, and hold the trade deficit down just a bit.

The corporate hissy fit is beginning right on schedule. The word being shouted loudest is “protectionism” and there are threats that this will lead to a trade war.

...more at: http://www.ourfuture.org/blog-entry/2009093814/myths-protectionism-stories-you-are-likely-hear-wake-china-tire-trade-tarriff-

One thing we've got going for us is this kind of stuff is hugely popular with Americans across the political spectrum. It's not like health care and other issues where there's polarization.

They are dumping - a specific trick to kill competition. China is selling their tires in the US consumer market at below their costs. They can do this because China is a huge country that funnels government money into their manufacturing businesses. In fact China, being a communist country, actually owns the tire manufacturing corporations. So, the entire country's resources can go on supporting these sales at below costs. But they don't need to do it forever.

China need only sell their tires below cost until they have wiped out ever tire manufacturers in the US. Because the US does NOT own their manufacturing industries, those industries have to sell their tires at reasonable prices or they go out of business. And that is China's intent. To drive out the competition in US tire manufacturing and then jack up the price of Chinese tires, after all competition has been eliminated. Then China can charge what ever they want.

So, then you have no choice, you have to buy from China because there is no longer any competition.

I'm glad to see tariffs finally being used. It just what this country needs - A Good Trade War. It will bring back Real competition and real choice.

"Obama can help free trade with tariffs"

http://www.ft.com/cms/s/0/cc5a3610-9e3c-11de-b0aa-00144feabdc0,dwp_uuid=9c33700c-4c86-11da-89df-0000779e2340.html

This is exactly the kind of trade practice on the part of China that was the reasoning behind the 3-year tariff being included in the agreement to let China into the WTO. As your OP says "Bush refused to enforce this agreement as China took over one industry after another". Fortunately, Obama has a different agenda.

Obama, even without new legislation, seems to know where the existing levers of power are to achieve his goals. Today he said that he sees this tariff as part of enforcing existing trading agreements, which it obviously is. China is just not used to us enforcing those agreements after 8 years of Bush. China and MNC's may bluster and posture (China may even appeal the decision to a WTO appeal panel) about the temporary pain for them, but Obama is on the right track.

Half of Chinese exports = foreign makers producing in China & exporting to their home territories.

http://www.allbusiness.com/transportation/motor-vehicle-parts-manufacturing/102937-1.html

http://www.allbusiness.com/chemicals/plastics-rubber-industry-silicone-silicone/11447185-1.html


Goodyear's chinese production = 10%+ of its global production. They "decline to say" what the export ratio is:

http://goliath.ecnext.com/coms2/gi_0199-6904762/Ready-to-be-a-player.html


The trade story = massive bait & switch. Tariff on China = resource to Philippines, Brazil, etc., that's all. They just move production around the world in response to trade conditions.

It's not as if China doesn't manipulate their currency against the dollar as a de facto tarriff on ALL our goods, and a terribly unfair advantage in keeping their goods ultra cheap.

As well as protectionist measures over and above that.

Not to mention state subsidies for their manufacturers.

This is a long time in coming. It is not nearly enough spine showing from our government though...

Our policies and allowing them to manipulate their currency vs ours and dump goods was ok for a while, but we need to wean China off the teat of the U.S. workers...

with China who supplies dirt cheap labor and massive government subsidies? They can't.