Raise one tariff and economists the world over will cry "trade war" and "protectionism." And why shouldn't they? President Obama's decision to tax imported Chinese tires is an obvious violation of free trade, and an invitation to backlash that China has already accepted, slapping its own duties on American chickens and auto parts in reprisal. Prices could rise for American consumers, runs the classic argument, and the move could also lead to a damaging global rise in protectionism. Is there any sound reason reason to defend the tariffs, when almost every economic writer--from liberal Ryan Avent to conservative Greg Mankiw, plus Yves Smith, Douglas A. McIntyre and Michael Schuman--thinks they're a terrible idea?
Very few writers are making the case, but if there's a justification for shutting Chinese tires out of American markets, here it is:
- Chinese Tires Have Proven To Be Unsafe, argues Garth Brazelton, who says he normally wouldn't support tariffs:
"There is a reason their tires are so cheap, and the reason (which is
the same reason why many of their products are so cheap) is because the
Chinese cut safety corners in order to beat the market...The Chinese are not internalizing this cost, and
consumers often are unaware the tires are safe at the time of purchase.
So, I applaud the Obama administration for sending a signal to the
Chinese, and for course-correcting a likely market failure."
- A Way to Force Chinese Products to Improve, argues Tom Bozzo at Angry Bear. "With little or no monitoring and financial returns to cutting corners, amazingly corners are cut. Lo, incentives matter!...Perhaps if we could just trade with the Aspirational China with its fast trains, gleaming 500-meter skyscrapers, massive renewable energy investments, and middle class, some of the conditions might actually hold to justify the U.S. economist hand-wringing. Meanwhile promotion of trade should not be a suicide pact."
- A Manageable Concession to Labor Unions, argues Kevin Drum at Mother Jones. "Frankly, the tire decision looks to me like a fairly standard payoff to a core constituency, not something that suggests a long-term change in policy. And just as with Bush's tariffs, my guess is that a white hot Chinese reaction will be quite enough to turn him around even if he did have plans for a more protectionist trade policy...My guess: China will retaliate, the WTO's gears will grind, and the whole thing will blow over."