Trade lawyer Scott Lincicome catches the Obama administration in another late Friday news dump, this time imposing prohibitive tariffs on imports of Chinese automobile and light truck tires under section 421 of the trade law protecting American industries against surges in imports. It’s a somewhat complicated issue that is susceptible to the mystification in which the Obama administration wraps it. Lincicome links to the Wall Street Journal report with the administration’s defense of the decision, but carefully takes apart the defense.
Inside the mystification Lincicome unwraps is — surprise! — the United Steel Workers union. Lincicome writes that the section 421 decision forced President Obama to choose between the narrow interests of the USW and everyone else in America, the United States’ image as the world’s free trade leader, and the future of both the American and global economies. Obama opted for the USW.
The Chinese are not amused. The Journal quotes the response of China’s government to the announcement. The Chinese Ministry of Commerce expressed strong opposition to what it called “a serious act of trade protectionism.” China “reserves the right to make further response,” according to the Ministry of Commerce statement. Can the United States afford to treat such an important purchaser of Treasury bonds in this fashion?
It is a bit jarring to see the the Chinese stand up for free trade against the depredations of the Obama administration, but they also have proved themselves astute students of other lessons taught by the late, great Milton Friedman. Cheng Siwei, former vice-chairman of the Standing Committee and now head of China’s green energy drive, recently said Beijing was dismayed by the Fed’s recourse to “credit easing.”
“We hope there will be a change in monetary policy as soon as they have positive growth again,” Siwei stated at a policy gathering on Lake Como. “If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard.” Friedman couldn’t have said it better.
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