In imposing punitive tariffs on low-end tires from China this week, President Obama made a risky decision at a bad time, and for dubious reasons. Obama cited a surge in Chinese imports that could destabilize domestic manufacturers; China said the numbers of imports have actually declined over the course of the year. Whatever the truth, the new tariff rates, which will jump from 4 percent to up to 35 percent over the next three years, aren’t likely to protect American jobs. Instead, distributors will probably turn to new manufacturers abroad. Economic pain from the tariffs, however, will be felt primarily by American consumers hit with higher prices and by the US companies that produce two-thirds of the tires imported from China.
Worse yet, Obama risks provoking a series of retaliatory moves as other countries seek to protect their own industries just as the global economy is laboring to produce a shaky recovery. Beijing’s threat to impose its own duties on American auto parts and chicken was an unsubtle hint about the dangers of playing with protectionist fire.
If Obama imposed the tariffs to appease unions and persuade them to support his drive for health care reform, he has his priorities scrambled. A trade war with China may hurt all Americans. And further economic distress only hurts the prospects of a costly new health initiative.