BrianGarst.com

The first shots in a trade war – guaranteed to produce heavy economic casualties right here at home – have been fired by Barack Obama.  In order to secure a Pyrrhic victory for narrow union interests, President Obama has sent unarmed and ill-prepared consumers to the front lines.

Obama has slapped Chinese tire imports with a three-year tariff – at rates of 35 percent the first year, 30 percent the second and 25 percent the third. The justification for this action is a law passed in 2000, as part of the negotiations to Chinese admittance into WTO, that says the U.S. can impose tariffs if “a surge in Chinese imports damages a U.S. industry.”

A surge? Are Chinese tires storming the beaches of Florida?

Basically, some union official decided that China was selling too many tires and came whining about it to the U.S. government. All of a sudden it’s protectionism time.

Unfortunately, protectionism doesn’t actually do any protecting.  It doesn’t protect consumers who will have fewer choices at higher prices.  It doesn’t protect tire importers who will also pay higher prices which, when they necessarily pass them on to consumers, will cost them business.

It doesn’t even help the particular domestic industry ostensibly being protected.  Without competitive pressures, industry will grow in an inefficient and wasteful manner.  Numerous countries, particular in Latin America, have tried to develop economically by protecting domestic industries.  It has never worked.  You can no more protect an industry through tariffs than you can protect a child by locking him in a closet for twenty years.

Update: Daniel Ikenson at freetrade.org offer a much more detailed analysis.

Barack Obama tariffs trade