Fausta's Blog

American and Latin American Politics, Society, and Culture

September 12, 2009 By Fausta

All this, and protectionism, too

As if flooding the economy with cash and multiplying the national debt in a period of months weren’t inflationary enough, now we’re going into protectionism.

You probably haven’t heard much about Section 421, but it is protectionism, pure and simple. The Wall Street Journal explains,
A Protectionist Wave
Obama invites a rush of similar claims with his tariffs on Chinese tires.

The White House leaked word late Friday evening that the U.S. will impose a 35% tariff on imported Chinese tires used by millions of low-income Americans. We wonder if President Obama understands the political forces he’s unleashing with this blatant protectionism.

Mr. Obama is setting a precedent in the tire case because he is applying 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 had lobbied Mr. Obama hard to reverse that pattern and set a new protectionist precedent.

Ah, the lobbyists. Where would we be without them? Well, take a look at the items that will getting more expensive soon: everything from TVs to garlic,

Then there are companies that face competition from lower-cost Chinese imports and want to push their antitrade agenda forward. Take the Committee to Support U.S. Trade Laws, which lobbed a pro-tariff letter into the White House this month. The umbrella group includes the American Furniture Manufacturers Committee for Legal Trade; the California Fresh Garlic Producers Association; the U.S. Beekeepers; the Florida Fruit & Vegetable Association; and the Flower Growers of Puget Sound. “This case is being watched closely to see whether Section 421 is an effective law or a dead issue,”committee executive director David A. Hartquist wrote to Mr. Obama.

This threat will now be realized as other industries pursue the 421 solution to reducing competition. Some of the product categories that have seen import surges include shoes, lawn mowers, television monitors, hearing aids, musical instruments like keyboards and guitars, women’s underwear, blouses and t-shirts, according to Greg Rushford, editor of a newsletter on trade policy. Oh, and trousers, women’s knit shirts and bras, according to Cass Johnson, president of the National Council of Textile Organizations—another lobby that must be gleeful that Mr. Obama has unleashed Section 421.

And let’s not forget the unions:

As a candidate, Mr. Obama courted union support, and the United Steelworkers filed the tire case anticipating he would pay them back.

The payback: U.S. to Impose Tariff on Tires From China. Didn’t take long at all, did it?

China’s not exactly sitting still over this.

Remember when Lula was lecturing Obama about free trade? Brazil and China eye plan to axe dollar by using their own currencies in trade transactions instead of the dollar.

Considering the Obama adminstration’s ruinous financial policies, expect more, much more of that to come.

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Filed Under: Barack Obama, business, China, economics, economy Tagged With: Fausta's blog, inflation

Comments

  1. Patriot says

    September 13, 2009 at 9:53 am

    About time we protect our domestic economy. Let’s look at history. We had tariffs since the late 1790’s and did quite well. Since 1980 when we began dismantling our tariffs we started running larger and larger trade deficits. China still practices protectionism and still has a growing economy. Protecting one’s own industry has been the basis for building every single economy in the world. Opening up the borders to low wage slave labor is opening up floodgates to a loss of jobs and eventually devaluation of the dollar as we buy more than we produce. Free trade is anti-inflationary until a certain level of trade deficit is reached (were credit markets start running out), after which it is extremely INFLATIONARY. Wake up Americans, we can’t keep buying on credit forever. We need to rebuild our industrial base. Free trade is a farce designed to break the back of American labor, our independence, our industry while making the ultra-rich elites and the multi-national corporations rich. Whether you are a liberals or conservatives – we are all Americans, don’t be a anti-American corporatist. Stand up for America and don’t support neo-con economics. If tariffs were good enough for Lincoln, FDR, Adam Smith, Eisenhower, Teddy Roosevelt, Jefferson and Washington – they are good enough for me.

  2. Pat Patterson says

    September 13, 2009 at 10:31 pm

    I imagine Brazil might be somewhat surprised to find that getting rid of most of its prior tariffs hurt its growing economy. But claiming Adam Smith was in favor of protectionist measures ignores that the only industry he judged worthy of national favoritism was defense. All others he judged to be mercantilist and basically politically motivated to protect various favored industries.

    Do we really need a national policy that protects high priced American tires from Chinese imports when one considers that most of the new tires coming into the company are from South Korea and some of the EU nations?

  3. WestWright says

    September 14, 2009 at 4:26 pm

    Nothing more than a payoff to the Unions by a corrupt President. The payees are the lower income US consumers who will now pay 30% more for tires…if they cannot afford new tires they will pay with more accidents as they drive further on their worn out tires. Economics does not lie, the govt and their shills do!

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