More on Obama's tariffs on Chinese tires

The world trade editor of Financial Times, Alan Beattie, offers an interesting perspective that adds more nuance, compared to the commentaries I have read on the tire tariff tirades:

Mr Obama has now come down on the wrong side of three big decisions on trade: happily signing a stimulus bill with Buy American provisions, abrogating an agreement allowing more Mexican trucks to operate in the US, and now granting the first ever emergency tariffs under a particular “safeguard” measure in US law. All are damaging both to trade and to the US’s international standing. All risk inflaming protectionist sentiment at a sensitive time.

But if he can use his capital to achieve universal healthcare and begin to shift the visceral dislike of trade that has gripped large parts of the American public and their representatives on Capitol Hill, it might prove worth it. He is playing with fire, which has creative but also destructive power. Just like globalisation.

Hey, that reminds me: didn't I write about the Buy American provisions in the stimulus bill? I did, I did :-)

It feels like .... 2005?

This chart, from the Financial Times, on how far, and how fast, international trade has decreased says it all

The reason?

explanation based on outsourcing: that manufactured goods comprise a bigger proportion of trade today than in the 1930s, when basic commodities had a larger share. Commerce in manufactured goods is more volatile and subject to shifts in demand than commodities, and trade in turn becomes more variable.

“The big shift in manufacturing from northern to southern countries over the past few decades ensures that falls in consumer demand in the north now show up in trade,” says Prof O’Rourke.

Either way, the implication of these explanations for the future of globalisation is moderately encouraging. If a simple fall in demand got trade into its current state, then – absent a flood of protectionist policies – a recovery in demand is likely to get it out.

So, against this background comes Obama's plan to impose tariffs on tires from China. Over to Brad DeLong--not a Republican by any means--who summarizes his response in the title of his post itself:

Barack Obama Does Something Really Stupid: Tire Tariffs