Tire wars: Another Big Labor payoff that will cost American jobs
Barack Obama has always been a protectionist double-dealer.
During the campaign season, he attacked John McCain for driving foreign cars. Never mind that among the 18 members of Obama’s auto task force and their staff, only two own American vehicles.
He also unveiled a “Buy American” logo to attack McCain as a hypocrite for embracing Harley Davison motorcycle riders’ support simply because he opposed a federal mandate that the government buy American-made vehicles. As I pointed out last summer, “there’s nothing hypocritical about opposing coercion in taxpayer-funded purchases. Hypocrisy is dissing America First voters while nibbling on Brie at private San Francisco fund-raisers and proclaiming to be embarrassed that Americans don’t speak Spanish –and then plastering the campaign with ‘Buy American’ stickers in the hopes of winning over a demographic you hold in utter contempt.”
As a result of “Buy American” provisions in Obama’s porkulus law, Canadian companies have “retaliated with measures effectively barring U.S. companies from their municipal contracts — the first shot in a larger campaign that could shut U.S. companies out of billions of dollars worth of Canadian projects.”
Now, the tire war is on with China.
Make no mistake: This is not about protecting consumers or American jobs.
It’s about paying off Big Labor again.
This time, it’s the United Steelworkers cashing in.
Yes, the same United Steelworkers union that backed the “Buy America” provisions in the porkulus law.
And the same United Steelworkers union that employed union hatchet man-turned auto czar-turned-manufacturing czar Ron Bloom.
One more fun fact: United Steelworkers president Leo Gerard “also serves on the U.S. National Commission on Energy Policy and is a founding board member of the Apollo Alliance, a non-profit public policy initiative for creating good jobs in pursuit of energy independence.”
Yes, the same Apollo Alliance whose board members included former green jobs czar Van Jones.
Cozy, huh?
In trademark “Obama lied, transparency died” style, the White House sheepishly buried the decision on a late Friday night.
The WSJ editorializes:
The White House disclosed late Friday evening that the U.S. will impose stiff tariffs on imported Chinese tires used by millions of Americans. Perhaps President Obama thought he could minimize controversy by releasing the news on a weekend, days ahead of the September 17 deadline and two weeks before he will host Chinese President Hu Jintao at the Group of 20 summit in Pittsburgh. But the protectionist signal he has sent in his first major trade-policy decision is unmistakable.
Mr. Obama has applied a previously unused part of the trade law known as Section 421. This allows U.S. industries or unions to seek protection from “surges” of Chinese imports, with a lower burden of proof than normal antidumping or countervailing duty cases. President Bush nixed the four Section 421 petitions that reached his desk, citing the national economic interest.
Domestic lobbies—including unions like the United Steelworkers that supported him during the campaign and filed this case looking for a political favor in return—hoped Mr. Obama would reverse that precedent, and they haven’t been disappointed. Such congressional protectionist stalwarts as Sen. Sherrod Brown (D., Ohio) and Rep. Sander Levin (D., Mich.) endorsed Friday night’s move. “Today, the President courageously stood up and enforced fair trade rules that will save jobs and help our communities,” crowed Mr. Brown, who had enthusiastically supported the tariff proposal. It hardly matters that the 35% tire tariff is less than the 55% the International Trade Commission recommended. Despite that attempt at political and economic baby-splitting, the door is now open to more such claims.
Bob Ulrich at Modern Tire Dealer reports:
GITI Tire (USA) Ltd., a member of the American Coalition for Free Trade in Tires, already has sent out its official statement of disappointment.
“This decision will cost many more American jobs than it will create,” said Vic DeIorio, GITI’s executive vice president. “It will also increase costs for, and take away choices from, American consumers.”
Fox News’s Daniela Sicuranza adds:
With the tariff, experts believe that no[t] only will the tire companies seek cheap labor in other countries like Vietnam and Indonesia, but that more American jobs – particularly in the retail end of the tire industry — will be lost overall.
Professor Tom Prusa, of Rutg[e]rs University, completed a study to evaluate how many jobs would be saved as a result of the tariffs. The answer was none. In fact, he beli[e]ves that up to 20,000 jobs in related tire industries will now be lost as result.
Section 421 of the trade law under which the tariff will be imposed, was created as a concession to get China into the World Trade Organization.
Irwin Steltzer points out the meeting of world leaders in Pittsburgh next week has just gotten a whole lot more interesting:
[W]hen the leaders meet in Pittsburgh on September 24-25 the last thing President Obama wants is a discussion of his position on trade. He has so far managed to talk the talk of free trade while walking the protectionist walk that appeals to his trade union backers. He would like to keep it that way. Unfortunately for him, he won’t be able to do that, having just come down on the side of the protectionists…
…So picture this. Obama now has to play host to a very angry Chinese President Hu Jintao, among other world leaders, in Pittsburgh, to all of whom he promised not to repeat the beggar-thy-neighbor protectionist policies that extended the Great Depression. He needs the Chinese to continue buying the IOUs he is pouring onto the market to cover the deficits he is running up, and to allow their currency to appreciate relative to the sinking dollar. Hu needs export-based jobs. The Obama charm might just not be enough to send the Chinese president home in a generous mood, or disinclined to continue his ruminations on how to free the world of the dominance of the dollar.
Obama’s decision on tires makes it clear that he has no intention of supporting efforts to revive the almost 8-year-old Doha trade-opening negotiations. Some 36 nations met in New Delhi earlier this month and professed interest in completing a deal by the end of next year. Not likely: the recession has made jobs, jobs, jobs politicians’ central concern, and few are prepared to take the flak that will surely arise if they open their markets, and expose even a few domestic companies or farmers to job-destroying competition. The talks collapsed in July of 2008 precisely for that reason. Obama has been sitting on proposals for bilateral free trade agreements with Colombia and Korea, among others, and sees no reason to antagonize the strong, protectionist wing of his party, already unhappy with his failure — so far – to throw his weight behind a bill that would end the secret ballot in union-recognition elections, and require compulsory arbitration when union-management negotiations break down.
Here’s the latest on China’s retaliatory measures.
Where’s President Obama going to be today tomorrow?
Addressing a very happy AFL-CIO, which applauded the tire decision.
The AFL-CIO deployed 250,000 members to campaign for Obama — and amassed more than $53 million in worker dues to elect Obama and other union-friendly candidates.
Follow the money.
***
Well, this is an incredibly optimistic take from Bloomberg: Obama China Tariffs Echo Bush, Clinton Prelude to Opening Trade .
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Simple: China can respond by saying they won’t be buying any more Treasury paper until the tariff is lifted. I wouldn’t blame them one bit (especially since Treasury paper is at risk of depreciation).
Here comes the trade war and the American consumer and taxpayer will be screwed by horrible trade policy.
Mr. Obama remember the Smoot Hawley Tariff? It sure did the US economy a lot of good.
Chrysler is owned by a German company. The “Big Three” get parts and assemblies from all over the world. Most “Japanese” cars sold here are built in the United States. What does “buying American” even mean in this context?
this guy has to be stopped and soon before there is nothing left to save.
I had a dream the other night…a non-violent military coup…Odopo isn’t exactly protecting us from foreign or threats from within.
America’s 1st and last racist, affirmative action president.
I smell a replay of 1929/30 coming our way.
It appears that this community organizer knows nothing about international trade. Here’s a clue, it works something like this. They buy our stuff, we buy their stuff, everyone is happy. Now, if we don’t buy their stuff and they don’t buy our stuff, what are you going to do with all the stuff that we’ve made? Sit on it?
How many times do we have to go through this??
Repeat after me, people:
“Marxists don’t know anything about maintaining a healthy economy, Marxists don’t know anything about maintaining a healthy economy…
The AFL-CIO should be proud. They have taken over two big car companies, they will soon own bankrupt tire companies, and they bought a president in the process.
I wonder if Walmart is still excited about Obama Bin Lyin’s public health insurance option?
With the tire tariff Obama is being true to the collectivist creed of enacting rules that will benefit the chosen few (in this case union bosses) at the expense of the other 99% of the population. Of course they consider the masses as nothing more than serfs anyway.
a little Ot but….
why is BO giving a speech on the anniversary of Lehman’s collapse? i can only see it that he is perversely celebrating one of the first death blows to capitalism.
and tarriffs?!?!?! this guys is nuts!
So, how does this work? Obama slaps huge tariffs on tires, benefiting a few union thugs. China says it will retaliate by slapping tariffs on poultry, among other things. This will have a negative impact on another set of union thugs.
Is there some sort of union rule book on how to deal with the law of unintended consequences?
Obama hates Chinese people.
Just remember: “we finally have a smart president, again.”
Isn’t it nice to see a true intellectual at work? I hear that tomorrow Chauncey might bring back the gold standard.
He’s so SMART.
Damn, I better get tires on my truck, mucho pronto!
CHina’s response was predictable, and Obama had better pray that China doesn’t pull its money out of our Currency, cause if they do, we will be hurting, badly
I’ll go with you. We can sing “the wheels on the bus go “thump thump thump” on the way.
Pray to who/whom I might ask? And then I might ask, on what basis should Obama’s prayers be answered?
He’s celebrating the event that catapulted him to the White House.
This could be very bad news. Not only does Obama need the Chinese to keep buying IOUs, but he needs to ensure that the Chinese do not decide to cash in their treasury bonds in retaliation. If the Chinese do that things will get very bad very quickly.
And the American public at large goes about its business as usual, head in the clouds with not a care.
This is all going to come crashing down on us and it’s not going to be pretty.
I’m so happy that we have such a brilliant leader. /sarc
Most dems have no idea how the economy works. They never took micro or macro economics, as taking woman’s studies about eco-feminism was more important to them.
…and never mind the fact that this type of protectionism extended the Great Depression. In liberal revisionist history, super-powered FDR saved us all with socialism.
Actually, that would a better idea. Dump the Fed.
Fearless Leader is poking a stick in the eye of our creditor about tires? What an absolute ass this sock puppet is. I want to see the Chinese reaction when he sends PIAPS back, hat in hand, to beg them to buy more of our debt. Besides all that, I see a huge train wreck coming and it is not going to be pretty.
After Hop Sing shows Obama where the rubber meets the road, I wonder if they’ll chat over a beer.
It is easy to understand the protectionism thoughts but this stupid maneuver by Obama will hurt our economy with job losses in other areas and folks won’t need tires. We have no president we have a Charlie McCarthy dummy. Who is Edgar Bergen??
So what happens when China stops buying American debt???
This president is stupid.
When I heard this news I could not believe it. Protectionism in tires.
Anyone with half a brian can see where this will lead. And he did it at just about the worst possible time.
Geitner and Summers seem to be not available for comment.
Someone must get these two on record with their opinion about this decision
This does however fall directly in line with the marxist push. Create as much chaos as possible in the capitalist system from within and the uninformed will grab the marxist life preserver.
Classic
Obama knows exactly what he is doing…destroying the country he hates and remaking it in his image. He wants to stick it to the ones who have “oppressed” his people for over 200 years, and he is succeeding. This is part of his reparations plan…do we need any more proof?
This must be the biggest MORON ON ECONOMICS this world has ever seen… Oh, by the way WE elected him… To put a tariff on goods manufactured by your BIGGEST DEBT HOLDER is ECONOMIC SUICIDE… Boy this sure will have an effect on the MILLION JOBS that the B.HUSSEIN administration has “CREATED OR SAVED”…
George Soros? Didn’t he say in an interview about the financial collapse of some institutions that “(that) was the culmination of my life’s work”?
It’s getting harder to believe that he isn’t doing it on purpose. He would like us to be a third-world country where he is der Fuhrer.
Here you go:
http://www.soroswatch.com/tag/george-soros/
MORON ON ECONOMICS = Moronomics = This sad excuse for an Administration that knows nothing of how anything works.
just what we need. A trade war with China. Way to go Mr. President. Way to cause trouble with the country that provides our country with affordable goods. This act will cause ‘ordinary Americans’ to pay more.
I can’t believe how much Obama has done since he has been elected to dismantle American exceptionalism.
If he thought we were bad before, when he gets done with America at this rate, we’ll be downright awful. And I really want to support our president. I DON’T want to support labor unions.
This is not Animal Farm. This is a plantation. The blacks and the unions are nothing more than tools for the Mastes in the Big House.
They dutifully pay their dues, live in poverty, vote Democratic and slip farther and ferther back in life. In the meantime the overseers line their pockets with cash.
When are they going to wake up and realize what’s being done to them. Even if not criminal it is immoral to do that to another person.
“He’s the Michelin Man
Made of rubber
The Michelin Man
Josephine Baker
Make him Zeppelin big
On your bicycle pump
And he’ll bump you ’til your bed’s just junk
So pump the Michelin Man
Pump the Michelin Man up”
Any negatives from this union appeasement move will be blamed on the Bush administration and any positives will be claimed as evidence that Obama was the right choice at the right time.
unions excel at substandard products and support mediocrity, zero is the result. two parasites helping each other.
Genius.
PO’ing the people that hold most of the gigantic debt Obama is incurring.
Affirmative action genius, that is…
robm you are sooo correct. it is fabulous to watch an intellectual at work after watching a “moron who couldn’t even pronounce nuclear for 8 years”. another 15 months of watching this harvard man f-up the economy, the world trade, and probably push us into a nuclear war in the middle east, should make even the bill maher morons question whether we could live through another ivy league lawyer president.
They’ll get more PO’d when Obama finishes having the Fed monetize the debt by printing money to buy Treasuries. The debt they own now will be worth pennies on the dollar due to hyper-inflation.
But maybe they’ll accept that monetary screwing in exchange for being allowed to invade Taiwan unhindered, and a new Greater East Asian Coprosperity Sphere.
Japan’s new Democrat government, the equivalent of our own, has announced plans to massively slash defense spending to fund an expansion of the welfare state. Sounds oddly familiar.
The only economics Obama took into account in this insane decision was how much money he takes in from the union thugs. He don’t give a fig for the USA, just his disgusting collectivist, elitist ideology. (Which, of course, puts him in the select “elite”.)
This President and Congress are clearly in way over their heads. States have to join together for concerted legal and financial action against this lunatic and his Marxist comrades in Congress. Shut it down now!
TigerLady is correct. No one is this stupid. This is part of the larger effort to break America apart. Bin Ladin knew the financial market is the key and so does Obama and his Communist cadre.
you are right, he is a racist, doesn’t care what color or not color(whites) you are, he still doesn’t like you…after all America is black now ya know, they did win the presidency.
Rush has said this many times.
rhetorical question flyoverman, what ever gave you the idea liberals have/had morals in the 1st place?
This is criminal malfeasance on a massive and treasonous scale. As I said on an earlier post, the states have got to band together and shut these people down or America’s golden goose is cooked. I want to see investigations and prosecutions.
Remember: no financial post-mortem (what rational people do before making decisions on corrective courses of action) or criminal investigation into the financial crisis has ever been initiated. It does not take a genius to figure out why. The American people are being played for suckers.
Showing more of Obama’s lack of executive experience. He has no idea the extent of his decision making. He makes them in the legislator bubble where he is insulated from the consequences. This is the real world bubba. Didn’t the large crowd outside your house casue you to wake up? Obviously not. I guess we need to shout a little louder since the Unions have you by the ears.
Just call him Barry The Job Slayer.
Yes tarriffs are a bad thing and can have negative consequences, but has China violated the terms of trade agreements? Yep, they are being brought to the WTO to address their trade practices.
What of China’s monetary policies?
No, one bad behaviour does not merit, or require additional, bad behaviour for a second party. It is about recognizing that there is bad behaviour on China’s part and what to do about it?
Sorry Michelle, this is a long due move that should have been done years ago. The Chinese are not playing fair and this isn’t even close to being the worst case situation. This is probably a shot across the bow that has implications about other situations too. China has a stock market bubble, a real estate bubble and a currency valuation bubble staring them in the face. Their economy/government stability are very precarious.
Free markets don’t mean free-for-all trading. We are not opening up our economy for destruction. We have important national interests and we better be willing to fight for them. Given the choice between communist Chinese fascism and the American union worker, it’s no contest. I will stand for Americans every time.
This move is a job saver.
Yea, I kept hearing that steelworker union president beating his drum for the 5000 lost jobs. Some of the parts he leaves out:
Is that the number lost was likely 4001 so he rounded up.
And that was over 5 years.
And the current American tire manufacturers abandoned the cheap tire market because of high union wages. Can’t make a cheap tire when labor is the largest cost factor.
And just wait for the chicken industry to start squawking at China’s high tariffs. Oh, but wait, did the chicken industry donate to BO’s campaign”? Not to the level of AFL-CIO.
Hmmmmmm
There was a time when I came here looking for debate. Looking to discuss – sometimes heatedly – the subtleties of politics, political economy, etc.
Now that we have Chauncey for president, however, those days are over. He’s just such a complete and utter imbecile, there are no subtleties. It’s like trying to get worked up over someone telling you that ice is cold, or the sky is blue.
Duh, the banks were too big. Government regulation, as Ann Coulter is currently SCREAMING, didn’t work – it NEVER works in the long run. So what does Chauncey do? Make the already too-big banks… BIGGER. Michelle said it. Coulter said it. Everyone knows it.
What fun is this? There’s nothing to argue…
And now Chauncey has opened a trade war with the country that’s lending us all of this money.
The stupidity is just breathtaking.
Perhaps instead of “lie,” Wilson should have said “WITH RESPECT, IF JUST: HOW STUPID ARE YOU?”
At least then we could say
1. He said “with respect,” and
2. He asked the question we all want answered. Is there a limit to this ignoramus’s stupidity?
Water Boyz: that the old regulations didn’t work is a canard. The Glass-Steagall Act worked very well when it was enforced. The Sherman Anti-Trust Act works well when it is enforced.
Those who argue that regulation is bad are engaging in ignorance. The U.S. Constitution is the government regulatory document in America. Should we now be calling for it’s abolition?
Capital markets don’t work well when cheating is rampant. But how do you define cheating without regulation? How do you remedy unfair practices without regulations?
Our freedoms are limited by our our inability to act responsibly and virtuously. That is why we are a republic and not a pure democracy in the first place.
Baseball, football and basketball are not diminished by the fact they have rules. It’s those rules that define the games not the shape of the ball or the uniforms. Same with free trade.
Capitalism is not an ideology but an economic tool subject to regulation if it is to be stable, fair and thus efficient.
So those of you who should “down with regulation!” as a required conservative shibboleth need to refine your arguments.
I do not believe we have seen the depths this administration will sink too with their nitwitian approach to anything and everything. 25% of the population would still vote for this buffoon and chief even after he set them on fire. The other 75% is now waking up and hopefully will change the course of things to come.
The USA became an economic giant with the use of tariffs and other protectionist measures. The same is true for Japan and Germany.
I am not saying this current tariff with tires is justified. But dismissing tariffs, and any other measures which may be classified as “protectionist”, is disingenuous given how much we have benefited from them.
Community Organizers always support their donors, that is if they did not have to shake them down for a donation. Chrysler Dealers, SEIU, UAW, AFL-CIO. Next we will need a Donor Csar.
The lawyer, the Asian Studies guy and the dancer got together and decided to be peanut farmers….
Great report on this Michelle, thank you so much.
FIFY.
I recommend reading some Adam Smith.
Actually blackstone I have The Wealth of Nations and have read the entire book, over 1200 pages.
Great Britain was the first nation to adopt “Free Trade” policies in the 1800s. At that time her economy was larger than the US and Germany. By 1900 both the US and Germany, who were using protectionist measures, had surpassed GB.
In modern times, Japan, South Korea, Singapore and China have all used and benefited from protectionist measures.
It’s fairly easy to explain why the U.S. economy expanded so fast: we essentially had a very large internal transcontinental free trade zone. I admit I don’t know much about German economic history, but I’d wager that following unification resulting from their 1871 victory over France, the people were very motivated by nationalist fervor.
The UK still hadn’t started outsourcing their labor force by 1900, had they?
By the way, where was the flaw in Smith’s reasoning? How is importing cheap goods any different, in terms of macroeconomic effects, from inventing machines that make goods more cheaply? Both actions “cost jobs”, at least until you consider the other half of the equation.
Blackstone, you are correct about the US having a large, free-trade zone that contributed to our vast economic growth. But we also practiced an economic philosophy called the American School, which Germany later emulated.
This did not mean we did not trade with the world. During this time we fought the Barbary Pirates to maintain Mediterranean trade routes, fought the British for impressing our merchant sailors, and forced Japan to open up for trade. But, we maintained tariffs on imported goods to our market and tried to foster development of local industry.
BTW, in Smith’s work he pointed out how China had the largest economy in the world at the time, despite the fact they participated little in foreign trade. He attributed their success to the fact that they had a large internal market with good rivers and roads and did not need foreign markets for growth.
I don’t want to say there were flaws with Smith. I think Smith looked at trade from a European perspective. Because they had several nations on the continent, none of which had a large enough internal market to allow huge growth, Europeans needed to liberalize trade with one another to grow.
The US, like China, has a large landmass, diverse climate, good rivers, and a large population that gives it advantages that the leading trading nation of that time, The Netherlands, did not have.
Smith did make exceptions to free trade. For example Great Britain had laws on the books during Smith’s time that specified imports to GB had to be shipped on British ships with a majority British crew. This obviously was a violation of free trade policy, but Smith defended it because Britain needed to maintain her maritime proficiency for reasons of national defense.
Yes he did, and he justified it by saying that defense “is much more important than opulence”. So he’s still making it clear that trade barriers harm economic growth, just that sometimes that’s necessary for more important purposes. I’m still not seeing how that can help it, any more than eliminating labor-saving machinery would help strengthen the economy. It all just comes across as different manifestations of the broken window fallacy.
Now there may be some benefit to protecting infant industries, but well developed industries don’t need the protection. I think the failures of the auto industry are illustrative of this. (and Larry Elder has an excellent column on that point)