Issue of the week: The growing trade dispute with China

In the end, President Obama tried to split the difference, said David Nicklaus in the St. Louis Post-Dispatch. The United Steelworkers had been imploring Obama since April to slap a 55 percent tariff on tire imports from China, claiming that the domestic tire industry shrank by 5,100 jobs between 2004 and 2008, while imports of tires from China tripled. (The steelworkers’ union represents tire workers as well.) Tire retailers and distributors pressed from the other side, warning that they “might be forced to lay off workers, and consumers would certainly pay more for tires” if tariffs were imposed. Last week Obama tried to steer a middle course, slapping an import duty of 35 percent on Chinese-made tires; the duty falls to 30 percent in the second year and 25 percent in the third. China responded swiftly and angrily, launching an investigation into U.S. export subsidies for chicken and auto parts.

The trade spat “comes at a sensitive time,” said Jonathan Weisman in The Wall Street Journal. Next week, Obama will host Chinese Premier Hu Jintao and other leaders of the G-20 nations at an economic summit in Pittsburgh—which happens to be where the steelworkers’ union is headquartered. Obama can’t afford to alienate the union, whose support he needs to get his health-care legislation passed. But nor can he afford to alienate China; trade between the U.S. and China now totals $195 billion a year, and a prolonged battle could hurt both countries’ economies.

Still, Obama will put up with a bit of squawking from Beijing for the sake of his long-term agenda, said Mark Drajem in Bloomberg.com. Paradoxically, his tough stance on tires “may be the opening move in a campaign for fewer trade barriers.” Obama wants Congress to approve new trade accords with Colombia, Panama, and South Korea. The deals are “stalled in Congress, in part because of Democratic opposition.” By imposing the tariffs, Obama establishes his pro-labor bona fides and gains latitude to push for approval of the trade agreements. The strategy worked for Obama’s four most recent predecessors, all of whom imposed various import restrictions just before they launched drives to pass major international trade agreements.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

That’s giving the president too much credit, said The Wall Street Journal in an editorial. Under Obama, “the U.S. is abandoning the global leadership on trade” that it has maintained since the 1930s. His apologists argue that Obama is “merely playing a little tactical domestic politics,” but “trade passions once unleashed can be impossible to control.” For proof, see Herbert Hoover, whose seemingly “shrewd” imposition of tariffs in the early 1930s ignited a global trade war that ushered in the Great Depression. At the very least, said the state-run China Daily, the tire tariffs “will cast a shadow over China-U.S. relations after both sides repeatedly vowed to make things better.” Beijing is quite prepared to retaliate against this “unreasonable and unfair” provocation. Don’t the Americans understand that trade wars have only losers?