The headline of a front page article on the tariff on Chinese tires told readers that: "threat of trade war with China sparks worries in debtor U.S." The article found some economists who expressed concern that China would buy fewer bonds from the U.S. government. If it looked further, the Post could have also found economists who would appreciate the fact that China was no longer buying dollar assets to hold down the value of its currency against the dollar. The decision of China to buy fewer U.S. bonds would lead to a higher valued yuan and an improvement in the U.S. trade balance with China. In fact, this is exactly what the Obama administration has been officially requesting from China. The third paragraph of the article cites economists without names who: "argued that it would all be for nothing; they said tariffs on Chinese tires would probably boost U.S. imports from countries like Poland and Mexico and do little to help the American steelworkers whose union brought the trade action in the first place." Economists with names would have told the Post that the tariffs would slow the shift in production of tires from the United States to other countries. The access to very low cost tires in China has hastened this shift. By limiting the availability of low-cost tires with the tariff, jobs will be lost at a slower rate. Therefore the tariff was not "for nothing." It is also worth noting that Clinton administration made a big point of touting the import surge provision in the deal that allowed for China to enter the WTO. If the United States is never prepared to use such a provision, then it implies that President Clinton was being dishonest when he included it in the trade package and used it in the promotion of the deal.
--Dean Baker
