College Libertarians & YAF newsletter

29 09 2009

Sorry for the lack of a post—I’ve been writing the inaugural issue of the College Libertarians and YAF Bulleting, our soon-to-be weekly newsletter.  In doing so, I’ve had to teach myself InDesign, which has taken a bit longer to do than I expected.  I think I’m doing things the clunky way; InDesign is, I’m sure, a lot more sophisticated that it seems, and there’s probably a much more elegant way to do most of the formatting.  But I’m learning, which is the significant part.

And I’ve also been going to my classes.  Which takes up a decent chunk of my time, unfortunately.

I’ll post the newsletter tomorrow so you can see what exactly I’ve been up to.  Until then, you can always read my other Michigan Review story from the last issue.  This one is about tire tariffs.  How exciting:

Unless you’ve recently driven over a nail, the tariff on the import of Chinese-made tires that President Obama just enacted likely means very little to you. Indeed, with financial giant Morgan Stanley reporting that tire exports constitute just 0.4 percent of China’s annual trade with the United States, such a piece of legislation would seem to have little absolute impact on Sino-American relations, let alone the global economy. Yet even though the chances of this new tariff triggering a devastating trade war are slim, its passage may be indicative of deeply rooted protectionist views held by the current administration.

Passed under the authority of Section 421 of the Trade Act of 1974, this new tire tariff takes advantage of a so-called “China-Specific Safeguard” written into the act to protect American manufacturers from “import surges” of cheap Chinese goods. Because of the targeted nature of tariffs enacted under Section 421, any such tariffs require little more than the President’s signature to approve. However, they have a limited scope and timeframe; the tire tariff, for example, will sunset in four years. And while the initial rate is steep-35% on top of the extant four percent tariff-it is not as high as industry lobbies (who were pushing for a 55% rate) recommended, and it will drop by five percent each year until its expiration.

But while the tariff is limited in its scope and duration, the impact on consumers already suffering from a recession may be sharp. According to the “Wall Street Journal,” nearly 17 percent of all tires sold in the United States are imported from China, and most of those are low-cost, non-premium tires popular precisely because of their budget-friendly price tags. Since the tariff is directed solely at Chinese-made tires, other countries may seize the opportunity to provide cheaper tires to American consumers. Unil then, however, those looking to replace their tires will be stuck paying more for the same non-premium tires or, if those become temporarily unavailable, will be forced to purchase more expensive premium tires.

Far from being a random act of economic malice directed at the Chinese, this tire tariff is designed to help American tire manufacturers cope with overseas competitors, who, the domestic manufacturers claim, are “dumping” their product on the market at a price that they simply cannot compete with in the short run. But the Chinese government has already accused the current administration of “rampant protectionism” in response to the tariff, and their Ministry of Commerce has vowed to investigate allegations of product dumping by US manufactures-perhaps laying the groundwork for retaliatory tariffs.

China’s accusations of protectionism are perhaps less unfounded than they seem. The Senate’s version of this year’s American Recovery and Investment Act originally included a “Buy American” provision, which mandated that all materials used in stimulus-funded projects had to be made in the United States. Only an outcry (and the threat of retaliatory tariffs) from some of our closest trading partners, including Canada, Mexico and the European Union, resulted in the provision’s removal.

Though a tariff on Chinese tires is undoubtedly good news for American tire manufacturers, it benefits that industry at the expense of potentially millions of already hard-hit consumers looking for a deal. Further, with the global economy already suffering from a deep recession, such action does little to bolster our standing among our trading partners. MR

I don’t really have time to formulate a high-caliber comment about this whole tariff-trade war thing, and it obviously wasn’t admissible in the article since it wasn’t an editorial.  But perhaps rattling sabers with the country that is keeping us afloat by purchasing our debt is not such a good idea in the middle of a steep recession that may or may not be abating any time soon.

Oh, and tariffs are a poor life decision anyway since they benefit a small number of vested interests (tire makers) at the expense of a large portion of the population (people buying tires).  And for such a tariff to be fair (if that’s even possible), it would have to apply to every product imported into this country so as not to benefit tire makers more than, say, lightbulb makers (if any are left in the country).

Even if there were tariffs on every imported product, theoretically giving no domestic industry an unfair advantage over any other, capital and resources would be being used far more inefficiently than if there were no trade barriers in place.  It’s just bad news all around.

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