IBJNews

HICKS: Chinese tariff is misstep toward trade war

Back to TopCommentsE-mailPrintBookmark and Share
Mike Hicks

Just a short year ago, economists of all stripes voiced fears of a rise in economic protectionism like that which contributed mightily to the Great Depression. I’m thankful cooler heads have prevailed and the worldwide recession now eases.

President Obama’s decision to levy a tariff on Chinese tires marks a troubling departure from that one area of economic serenity. By making the announcement late on a Friday evening, the president surely hoped to miss another catastrophic news cycle of the likes that have plagued him for weeks. By levying the tariff on a small industry, he sought to bolster flagging domestic support with a dose of 19th century protectionism. It is pure politics of the rankest sort.

Let me be clear that this foolishness has long bipartisan roots. George W. Bush was also guilty of protectionism with steel tariffs. The industry was far larger, but we were not then in the grips of a global recession. At least Mr. Bush learned one lesson and did not repeat the mistake, but in this matter both men failed their country alike.

It’s no surprise that, in light of this policy misstep, Mr. Obama is well blessed with an economic team who understands the need for free trade. His economists and supporters—especially Paul Krugman—are strangely silent on an issue upon which they built their reputation. Indeed, Krugman was elevated from tweedy professor to national columnist based on a popular book castigating the Clinton administration for far smaller lapses in judgment.

The president’s choice of timing is suspect for another reason. Coming as it did while Indiana Gov. Mitch Daniels was in Asia on a highly publicized trade mission raises new questions. Is the president willing to spawn a trade war and dampen foreign investment in order to weaken a potential rival in the 2012 elections? Let us pray it is merely ineptitude at the White House.

In times gone by, the Chinese would simply respond by raising the tariff on U.S. tires. Those days are past.

Recognizing that trade wars are purely political, the Chinese have retaliated with astute political choices. The first victims are poultry producers. Tyson—a huge chicken producer and longtime Clinton financier—is about to feel abrupt pain at China’s partial exclusion of U.S. imports. If Hillary Clinton ever again condescends to step foot in Arkansas, Tyson might bend her ear on the matter.

The Midwest needs to worry, too. We produce chicken and pork. These huge exports to China represent items we just might be eager to sell to the world’s fastest-growing economy. Our largest exports to China also include electrical supply parts, aerospace parts, medical equipment and supplies. General Electric is another close friend of the Obama administration likely to feel the heat from Chinese reprisals.

No matter what you think of President Obama’s policies, his cool demeanor and earnestness command respect. The fumbling antics of protectionism do not. This is the first shot in a trade war not of necessity, but of choice.•

__________

Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

ADVERTISEMENT