Since when did trade policy become a covert operation?
Like thieves in the night, the administration snuck out an announcement late Friday evening that President Obama had signed an order imposing massive duties on Chinese tires. The United States argued that a “surge” in sales of the Chinese tires indicated unfair pricing and resulted in the loss of 7,000 U.S. jobs. They did so ...
Like thieves in the night, the administration snuck out an announcement late Friday evening that President Obama had signed an order imposing massive duties on Chinese tires. The United States argued that a “surge” in sales of the Chinese tires indicated unfair pricing and resulted in the loss of 7,000 U.S. jobs. They did so at the urging of unions and despite a lack of support from U.S. tire manufacturers, many of which are already producing tires in China. Naturally, the Chinese erupted with cries of “rampant protectionism” and introduced their own twist on giving the United States the bird with threats of retaliation against U.S. poultry imports. Vehicles may also be targeted.
Why you might ask would they do it late on a Friday evening, after newspapers and evening news shows had seen their deadlines pass? And more saliently, why might the United States do this, in the first place?
Of course, the first question is easy. The Obama administration was trying to bury the story. You can hardly blame them. It’s not pretty. It’s pure politics. I’m all for using trade laws to ensure fair trade. But, the U.S. case here is weak and its timing is appalling.
Which in turn gets us to the second question.
Just one day earlier Russia’s announcement of its desire not to impose sanctions on Iran in an effort to restrain its nuclear arms ambitions had U.S. officials scrambling for plan B. One very senior official mentioned to me this would mean an intensified effort to reach out to the Chinese. Eight hours later we imposed these duties on them. Now I understand that the secret to a successful “partnership” with the Chinese is the ability to walk and chew gum at the same time — or more accurately to walk together while occasionally smacking each other around the head and face. But still, a little thoughtful coordination might be nice.
Given the central importance of China on Iran, of China on North Korea, of China on the global economic recovery, of China on climate and given the weakness of the case on tires and the generally lousy message it sends regarding our stance on trade (the Obama team’s first big trade move is clearly a protectionist one), couldn’t this have been tabled? Handled another way?
It should have been, of course. But it wasn’t for two reasons. One is that the administration needs the unions to get out there and provide grass roots support on the health care bill. That’s been commented on by others and is certainly an important piece of explaining this move which, at best, can be described as ill-timed and ill-considered.
But there is another undercurrent here. This was just one of several moves last week that suggest that the Obama administration sees another threat that is more important to its own survival than whatever happens in Iran or on climate or even on health care. What Iranian nukes are to Israel in the way of an existential threat, unemployment rates are to the Democratic majority in Congress in terms of next year’s elections. You will see many offensives from this ambitious administration over the next 18 months but the most central from a political point of view will be a full-court press to show that not only do they care about jobs but that they have a plan for reversing the losses that have been the most painful dimension of this recession.
So last week there were several early steps in this regard. Positioning themselves as a champion of job preservation to unions on tires was just one. Moving car czar Ron Bloom to become the “manufacturing czar” was another. And, buried in today’s announcements of financial reforms you will find announcements of continued financing supports for small businesses that were retained despite reported resistance from the Fed. These are just minor tactical moves. But taken together you are seeing the first volleys in a battle to position the administration as activists on job creation. Climate legislation may falter, but rest assured there will be an energy bill that is positioned largely as a green jobs bill in any case. There may not be another stimulus package in name, but next year’s budget will contain one within it and the focus will be jobs.
There’s no harm in this, in principle, of course. Indeed, it makes sense and one hopes that the administration’s economic team gets in front of this story in a way they did not on health care, defining goals and principles clearly and early. But the administration needs to be careful. Exports are a leading U.S. job creator and triggering global protectionism and trade wars worldwide while simultaneously hanging back from getting FTAs approved or making progress on a global round of trade talks is a proven way of losing jobs in the name of creating them.
And if you are losing jobs through protectionism and losing vital partners internationally at the same time, well, that’s a formula for trouble that can’t even be hidden by quasi-clandestine press announcements late on a Friday night.
MARK RALSTON/AFP/Getty Images