A really dumb move…

President Obama promised at the last G20 meeting to “refrain from raising new barriers to investment or to trade in goods and services”. Then a week ago he slapped a 35% tariff on imported low-end tires from China. Why? The American tire makers didn’t complain about Chinese tire imports, and they don’t support the new tariffs. American tire makers don’t even make low-end tires – if they offer them at all it is through joint ventures with (wait for it) Chinese manufacturers.

So who lodged the complaint that set this off? The United Steelworkers, who don’t even represent most of the workers in American tire manufacturing. Apparently, despite campaign promises and public pledges to other nations not to raise trade barriers during this worldwide fiscal crisis, and despite wonderful campaign promises not to let special interests rule government policy, when the United Steelworkers speak, the president kowtows.

President Obama argued that he was just doing what the law required, but in fact that was a weak excuse, since the previous administration opted not to act on a number of such complaints (and Obama chastised the Bush administration for that during his campaign). The administration is not required to act on every complaint, and would be wise to be a lot more selective on the ones it does pursue.

This will be a big mess. China has filed a complaint with the World Trade Organization (WTO), and they will almost certainly rule against America on this issue. More than that, we need the Chinese on our side because they own a very large amount of our public debt, and if they stop rolling over our Federal bonds when they come due we would be in a world of hurt.

And all for what? To appease the United Steelworker’s Union. This is a no-win situation, and the administration was really, really dumb to get sucked into it.