In China Tires Case, Obama Strikes Middle Ground

This decision shows that President Obama intends to be the 1st President for a generation who will be remembered for making a difference at home instead of abroad. He has clearly signalled that health care reform for Americans is more important than keeping China happy.

That is how the decision will be interpreted in China. But China only has itself to blame.

President Obama must know that China will not now cooperate on Climate Change, reviving the DOHA round, restructing the Bretton Woods institutions etc in Pittsburgh. He has signalled that he is willing to sacrifice the possability of those things because basically he doesn't trust China to deliver on its promises.

He has good reason not to. China's prevarication on taking up IMF bonds is going to prove very costly. They promised to buy $50bn at the London summit, tried to back out in July and then last week changed course again and signed the deal hoping for concessions in Pittsburgh. The reality is that Hu Jintao goes into conferences like the G20 without an adequate understanding of the issues but can't lose face by saying so and signs up to things he doesn't understand and doesn't intend to do. This is routine and accepted within China but Hu Jintao has yet to learn that you can't do it in the international arena.

President Obama has just given the Chinese a lesson in international negotiations and told China to grow up, get their act together, develop a body of expertise to support their leaders on complex issues and until then forget trade offs.

China's response will be interesting.

Once again the American consumer/taxpayer is required to pony up to protect high paying union jobs. First GM and Chrysler, now the tire industry. In 15 years, China will be the dog and we will be the tail. Then what?

What is the trade law, & who agreed/sign-on-to the agreement?

Middle ground?? Are you joking? This is a disgrace -- it's a total sop to unions. Industry wasn't even calling for protection. He is opening the door for other countries to follow suit. This Administration is taking no action to move Doha round forward, the FTAs with Columbia, Panama, and South Korea are languishing. Obama hasn't even requested trade promotion authority. Obama is the most anti-trade president in the post-war period. Period.

This is good news. I hope it's the first of many tariffs on Chinese goods. I suggest 30% tariff on all products from China until they let their currency float and address the environmental and social costs of industrialization. While I'm not an Obama fan, if he keeps doing things that benefit the USA and its citizens, instead of what benefits businesses and foreign countries, I might vote for him in the next election.

I Agree with David. Ultimately consumers are going to suffer by paying higher prices!

There is something strange here: how come this complaint was made by the United Steelworkers union, but not one single U.S. tire company supported the tariffs ? What does the United Steelworkers union know about tire making business ? Are they gonna make their next complaint against too many iPhones assembled in China being imported into America ?

The tire tariff is the right move. However, Obama should have made it the 55% the ITC was recommending. Until China starts playing according to international rules, I think punishing Chinese business is the necessary move. I hope the Obama administration has planned for potential Chinese counter-measures.

So the democrats with this decision protect American jobs while the republicans outsource them to countries like China.

Tony, I hope those "free" trade agreements you mentioned are dropped or remain in limbo forever. Let me pick on South Korea. They have PROVED that they will not embrace free trade. Their business structure involves government sanctioned conglomerates. While S Korea automakers have unlimited access to US markets, they restrict imports of US vehicles. Same deal with appliances. They reject US beef, citing safety concerns over mad cow, but such an embargo would technically be against free trade agreements. I live near the HQ of Micron, which makes memory chips, and with the help of our congress representatives, tariffs were imposed on S. Korean rival Hynix because of their government subsidies and dumping practices. The WTO and NAFTA have been a joke and neither have lived up to their promises. Farmers in Mexico cannot make a living because of cheap (and subsidized) US agriculture; fueling illegal immigration. These illegal immigrants depress wages and living conditions for American workers... So, if you are in the elite class and live in a gated community and profit from "free" trade, great. Everyone else has been harmed by it.

Retarded move. Obama's got enough on his plate already. Why anger China at this time?

Well, Obama will find that China will offer its "Middle Ground" pretty soon too. How about 100% tariffs for all US cars sound to you?

how safe are these made in china tires?

Until American workers can accept lower wages like what the Chinese workers are getting,there is no way US can compete on lower cost.American workers want higher and higher wages with less and less work which is not the case in world economics.US should moved on to high technology and high industries with high wages instead of competing with labour intensive industries.China and US does not produce rubber and rubber is purchased internationally at international pricing.So do compete in the tire industries in high quality and high price tires instead of lower price tires.US cannot compete in labor intensive industries anymore unless American workers are willing to accept USD120.00 per month wages,just like what the Chinese workers are getting.Is this possible?No way.

Simon

China's retaliation was swift. Ministry of foreign trade just announced that an investigation is launched against 'unfair trade practices' of US auto parts and chicken imports. I'm sure the amount affected would be much larger, and the impact would be greater. Obama seemed to have picked Ron Kirk for no other mission but to keep Chinese imports from the US border. Many cases gone by since Obama inauguration, but I guess China finally decided enough is enough.

In the newest trade data, it seemed deficit with China just rose 12% sequentially, but with EU almost doubled. But China was still singled out.

The economies between China and the US is far more complementary than competitive, whereas with EU and Japan it's far more competitive than complementary. Therefore the sequence of events by the office of USTR since Obama's term could only be interpreted as prejudiced and unreasonable, in particular after the G20 pledge of not putting up more protectionist trade barriers.

Their view is simple: they would have to begin to trade blow for blow until any such preferential protectionist impulse in Obama's administration is completely extinguished. Meanwhile not a single drop of tear would be shed in EU, Japan, or elsewhere in the world.

Let's just wait and see how this saga unfolds.

Gosh,
To all these "pro free trade" people that complain about how prices will be higher:

You in your comfy office jobs, supporting unfair and one sided free trade deals with china that destroy our manufacturing base. You are traitors. All of you. Free trade without responsible protections for our working class will.....
1)Endanger our national security. Example? WW2. We were able to out produce weapons and supplies due to our THEN extensive and strong manufacturing ability and skilled labor. We have lost that, so what if we are attacked by a superpower like Russia or China? Hmm? Will you import your tires, parachutes, steel from your enemies?

2)It will worsen the illegal immigration that you ignorant "free trade" republicrats (both parties suck)constantly whine about.

We need to enforce fair pay for our workers, illegal labor practices here and abroad, as well as keep tariffs high until our "partners" (enemies) start playing the "fair trade" game themselves.

free trade means selling out americans for the interests of international corporations with no loyalty to this country. Keep buying the right wing propoganda, and you will find yourselves in quite a pickle when WW3 finally does come. Then, you will lose YOUR cousy office job, and you can either be a man and fight like our forefathers for our SOVEREIGNTY, or you can eat your republican/democratic voter registration card.

You free trade enthusiasts make me sick, traitors.

September 12, 2009 07:29 PM
Well, Obama will find that China will offer its "Middle Ground" pretty soon too. How about 100% tariffs for all US cars sound to you?
>

I think that we should withdraw from your precious chinese NWO bullocks because your country is unfair and refuses to allow your currency to appreciate. China has declared economic war on the US by not following the agreed treaty. We should cut you off. If it causes a great depression SO BE IT!! We are already starving here with no health care, now lets see how you people handle a default on our national debt, morons....WE HAVE MOST OF THE FOOD. So don't overestimate your importance China, and don't underestimate ours. We are not weak, nor are we in decline. Our problems will be MUCH more your problems very, VERY soon. I'd rather be secure, fed, and poor, than a slave to international businesses who support your oppressive and dictatorial regimes, both in the US, and China.

Xiang Yu,

China already has tariffs of 25% on US autos and other goods. Meanwhile, Chinese goods have free access to US markets. Does this sound like free trade? I don't think so.

Yet another poorly conceived, unilateral decision. This administration is getting worse by the day. Do any of those people understand the economics game ?

Sad to see so many uninformed people.

I have been in the tire business for over 30 years supplying the replacement market. If I could buy and sell tires made in the U.S. I would, however the manufacturers in the U.S. chose over 10 years ago to exit this business due to lack of return for their investment,strickly a business decision. The demand for these tires continued the supply dried up, then along came the Asian manufacturers, who answered the demand.
The adjustent ratio on tires produced in China are as low as tires made in Japan, Korea or Brazil after all their main technology came from the same manufacturers who chose to remain silent during this whole issue.
The Chinese will continue to grow over the next 4 years. Once these tempoary tariffs are over the USW will then realize that they have created an even bigger problem, supply from China as well as all of the other countries which geared up to supply tires during the 4 year period. What do you expect when you have a loud mouth Canadian who leads the Union, fighting for American jobs!
Our current expanding government proves every day they have no real grasp on the fact that true free trade is the answer to our future, not selective protectionism.

Those who do not learn history are doomed to repeat it. Please protectionism does not work, we learned this back with President Hoover, and more recently with President Bush.

The steel tariffs lead to more expensive cars, among other products, making those products uncompetitive with rival companies. It lead to more job losses, even in the steel industry, than the tax was originally desired to to save.

Law of unintended consequences...

Doesn't Obama know 65% China made tires are from US companies? Of course he does!
What he want is just to get his health care reform plan supported by USW. When he balances the Pros and Cons, he finds Chinese workers job is less important than USW support.

Politican is politican! Obama was a new face, but not a exception.

To Charles:
"We have lost that, so what if we are attacked by a superpower like Russia or China? Hmm? Will you import your tires, parachutes, steel from your enemies?"

"free trade means selling out americans for the interests of international corporations with no loyalty to this country.... you will find yourselves in quite a pickle when WW3 finally does come."

Wake up Hitler! Cold war is over. WW3 will never come!

This decision will cause the lose-lose result.From the perspective of China,because of tariff,employers in the tire industry have to fire the workers. From the perspective of America, the local American have to pay the high charge for tire

Given that California and high tech industry is the most important power base for Obama, I doubt the trade dispute will go very far.

Most likely the case will end up somewhere in WTO court's logjam.

We should cut you off. If it causes a great depression SO BE IT!!---Charles

Excuse me, sir! but it is the creditor who decide who is being cut off, not the other way around. And if I'm not mistaken, your great USA is borrowing money like crazy from CHINA.

How ignorant you people are, before posting who is right and who is wrong, one should look into the facts.

And facts from WTO and all related trade agreements between US and China
“SHOWS" not just suggest that the US does not have any kind of tariffs on approx 90% of goods imported from China, rather China has tariffs on approx 60% of the products imported into US.

All the free trade agreements and WTO rules clearly describes, that every product has to be subjected to tariffs as specified under WTO rules and trade agreements, and its unfortunate that US been so lazy to implement the legal rules established by WTO and on other hand China been established the tariffs as it is supposed to be.

And now fortunately, President Obama is at least attempting to establish these tariffs, which are legal and every other country is been doing it for years.

So, please read the facts and get educated before commenting and wasting some valuable time.

I think China is just as protectionist as the US. I am currently working on a partial government funded project and anything that is bought must be made in the US by an American Company. No complaints but when China dared to do that same, all hell breaks loose.

Its very easy for some one who has a non-exportable job, to sacrifice good paying american jobs to China so they can save $10.00 on a cheap tire made by slave labor in dangerous working conditions, just so they can have their idealogic dreams come true. How discusting.