Our New Trade Policy

As far as I can tell, it is the following:

Borrow billions from China and other rising powers

Decree “Buy American” when it comes to government contractor purchases, to take market share away from Chinese companies

Subsidizing failing American companies (GM, Chrysler, etc) that compete against more efficient Chinese companies.

When decrees and subsidies don’t work, tax goods from China.

In other words, a complete disaster.

14 thoughts on “Our New Trade Policy”

  1. Brent,

    Well said.

    A useful scoring mechanism for the foreign policy decisions of this administration is the following (note the categories, so far at least, are mutually exclusive)

    1. The policy originated with SecDef Gates and/or SecState Clinton
    2. The policy is crazy

  2. I like that scoring mechanism; I think it works.

    btw, the Brits tried to protect several of their industries in the same way (for instance their auto industry) and ended up killing them.

  3. Unfortunately, those metrics seem to be pretty accurate, Dan.

    The last four presidents, Reagan, Bush, Clinton and Bush, have each left office with a world that was significantly healthier, wealthier, more peaceful and more connected than it was when they took the oath. If Obama goes down this path with China he could break the winning streak.

    To add insult to injury, there are other countries in the world that manufacture tires – Brazil, for example – so its likely that imports from other sources will simply increase to offset the decrease from China, so the jobs will be lost anyway.

    Of course Reid-Pelosi-Obama might come up with some sort of comprehensive set of tariffs – my bet would be on some kind of “carbon tariff” [1] – that would reduce imports across the board. It would also reduce economic growth, restart the recession just as its ending and those tire plant workers will still loose their jobs.

    [1] http://www.chicagotribune.com/news/chi-tc-nw-climate-0824-0825aug24,0,833471.story

  4. And the hits just keep on coming [1]:

    “The US administration, with support from Europe, is seeking to reach agreement on a new framework for tackling global economic imbalances at next week’s G20 summit inPittsburgh.

    The goal is to achieve both a basic agreement on what needs to be done to produce more balanced global growth and a process for ensuring that countries deliver on their commitments.”

    Hmmm, now Obama is supporting a global cap on capital surpluses?

    [1] http://money.ninemsn.com.au/article.aspx?id=864269

  5. Robert Samuelson had the same harsh view of the protectionist action here by Obama, but feels it sends an important message China’s way:

    “So the verdict on Obama’s tire tariffs is paradoxical. As protectionism, they’re bad policy. But they send the right message to China: Cease and desist. Predatory trade spawns destabilizing economic imbalances and political resentments. It menaces the global economy.”

    http://www.washingtonpost.com/wp-dyn/content/article/2009/09/20/AR2009092001299_pf.html

    I await the next lethally flawed Chinese product in America and wonder what the media firestorm will be like and who will be the first heartland politician (of either party) to kick-start a “demonize China” bandwagon for political gain in the heartland.

  6. Eddie

    I’ll go out on a limb and predict that the “heartland politician” will be Ohio Senator Sharrod Brown. Everything he knows about economics he learned at an AFL-CIO fund raiser.

    He’s from my state (sadly) and uses just about every crisis as an opportunity to argue for protectionism.

  7. Eddie,

    Note that Obama did not accuse China of preditory trade practices. He accused Chinese companies of charging prices below their American competitors. Bizarrely, a protectionist relic of our trade laws allow this as a reason to put sanctions on another country.

    Brent,

    I’m pretty sure the family name of that politician is Obama.

  8. I agree. I wonder how Ron Kirk felt about all this hooey-phooey given how successful he has been thus far in promoting a pro-trade agenda with our neighbors and trading partners.

  9. I think the reaction of most of those who expected some concrete improvements in the Obama administration has been to repeatedly bang their heads against the wall.

  10. As cheap talk, certainly it’s fine lip service.

    When we consider the great accomplishments of Bush, Clinton, and Bush, it is amazing none of them won the Nobel Peace prize for building globalization.

    But sure, empty words that negotiations are ‘still on’ must count for something, too…

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