Economics, International economy

Obama’s Choice: Big Labor or World Opinion?

On September 11, 2009, at the behest of Big Labor, President Obama decided to impose a safeguard against the import of Chinese tires. We might recall that the president decided that a three-year safeguard, commencing with a 35 percent tariff in the first year and then dropping by 5 percent in the subsequent two years, would give the U.S. tire industry the chance to get back on its feet. While this was pie in the sky, President Obama’s decision was not the last word. China has now initiated litigation against the United States at the World Trade Organization (WTO), challenging the tire safeguard as inconsistent with U.S. obligations at the WTO. We will in all likelihood lose this case after what will assuredly be a long, drawn-out WTO proceeding. At that point (if not before), President Obama will have to decide whether to remove the measure and face the wrath of his union constituencies, or to have the United States suffer WTO-sanctioned retaliation against related or unrelated U.S. imports into China and to play hardball with Beijing. His decision is not to be envied.

Comments are closed.