Tag Archives: tariffs

Triangulation

A fire in a garment factory in Bangladesh has killed more than one hundred workers.  Union watchers will recall the Triangle Fire in New York, which killed garment workers in tragically similar circumstances.  There were few exits and no fire escape.

Triangle_Fire_Coalition_logo

This is where unions are needed.  Instead of fighting a zero-sum game with bankrupt factories in America, unions should be organizing these third-world sweatshops.  Raising standards for the poorest workers will bring the greatest benefit for all – and reducing labor cost differentials will help to keep jobs at home.

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Green Tariffs

The prospect of “green tariffs” answers a longstanding complaint about global free trade and, at the same time, promises to level the playing field for American workers.  According to The Economist,

France and certain American senators want to talk up “green tariffs” in case China and India duck binding limits on carbon.

Environmentalists fear that globalization will incite a “race to the bottom,” in which exporting nations gain advantage by trashing the environment.  Similarly, workers worry about competition from nations with poor standards for labor protection.  Green tariffs should be employed on both accounts.

The WTO should set global standards for environmental and labor protection, and then assign exporting nations to classes based on their level of compliance.  When trading outside of their compliance class, a nation could expect to face higher tariffs.  This would give everyone an incentive to clean up their act, and it would give the WTO a means to address serious complaints about free trade.

See also: Can Green Trade Tariffs Combat Climate Change?

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President Pushed Leftward

This week’s Economist agrees with Jeremiah that the Chinese tire tariff was a bad call.  The Economist, which had endorsed President Obama, now calls him a “weak president being pushed leftward.”  Even National Socialist Radio, picking up the topic, chose to sympathize with American tire buyers (and dealers) over the interests of the steelworkers’ union.

So, why did he do it?  Pandering to special interests, says The Economist, and it’s hard not to agree.  Candidate Obama enjoyed strong support from the steelworkers, teamsters, service employees, culinary workers, government workers, auto workers, teachers – virtually all the unions – and now is payback time.  Vice President Biden said as much when he addressed union leaders at the Fontainebleau earlier this year.

We would all like to protect those union jobs, but this move does more harm than good.  It’s just an example of the President being pushed around by the unions.  Jeremiah feels bad for him, and hopes that we’ll soon see evidence of some leadership.

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Bad Call On Chinese Tires

President Obama made a poor decision to raise tariffs and lock Chinese tires out of our market. This is not a good time to start a trade dispute with China. The president should certainly protect American jobs, but we have to pick our battles. If he wants a trade war with China, Mr. Obama must first clean up the nation’s balance sheet. China holds about $1 trillion of our national debt.

Trade restrictions can and should be used to protect American industry – but only as a short-term measure. This is a tactic, not a strategy. If an industry can’t compete in the world market, it must be left to its fate. Our workers need to be deployed where they can do the most good for the economy.

The downside of protectionism is that it raises factor prices for other American industries, raises consumer prices, and leads to retaliation from our trading partners. In this case, consumers will lose access to cheap tires. We may save jobs in manufacturing, but we will lose jobs in distribution and retail. Significantly, no American tire manufacturer asked for the tariffs.

President Bush made the same mistake in 2002, protecting the steel industry. This cranked up steel prices and made American cars more expensive.

See also: China-U.S. Trade Dispute Has Broad Implications, Obama slaps duties on tire imports from China.

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