MAN, AM I GLAD I JUST HAPPENED TO SPEND MOST OF TODAY WRITING A GROWN-UP POST. Why aren’t more people talking about this:
The developing dispute over US tariffs of Chinese-made tires is likely to drive prices higher for Americans as Chinese tire producers appeal for a collective price hike to soften the blow from the recently approved tax.This is not big. This is bloody huge. This is the start of a trade war with China. More than that, it's a preview of a likely result of passing cap & trade, namely that we'll have to pass massive tariffs to give U.S. businesses any shot at surviving in the global marketplace. I know health care and ACORN are big right now, but I think this deserves an equal share of the nation's attention.
Chinese tire exporters are also urging the government to offer higher tax rebates, said Zhou Zhiyong, general manager of China's largest tire exporter Guangzhou Huanan Rubber Tire Co Ltd.
"Chinese tire producers have reached a consensus that we are going to raise the price on tire exports to the US by large margins," Zhou told Guangzhou Daily. He added that the move would make American consumers feel the pain caused by the new tariff.
Let me direct your attention to two key parts of this article. All boldface is added:
Many [Chinese] tire companies have begun exploring markets outside the US...[such as] Europe, Southeast Asia, South America and Africa...In other words, the entire rest of the damn world. And pay close attention to this next part:
In addition, China may sell its tires to countries like India, Japan, South Korea and Germany, who are likely to supplant China as the low-end tire suppliers to the US market...Got that? There is a reason U.S. companies don't make these tires: because it's not profitable enough. With metals there are material test reports that show who the manufacturer is and where the material originated. I don't know how the tire industry works, but if it's not as strict it's entirely possible we will still be buying these Chinese tires, just doing it through other countries like Japan & South Korea who will mark them up first. Or we'll be buying tires made in Japan & Korea which still won't help U.S. industry. Unless, that is, Obama enacts an across the board tariff that covers all import tires. Whatever happens, though, the American consumer loses because of increased costs.
Chinese imports come at the lower end of the price spectrum, where US producers have little interest in, or capacity for, making substitutes for the Chinese imports. More likely, their demand would be satisfied by imports from other countries who offer low-end, low-priced tires.
What I don't understand is why Obama has decided to do this now, while he's in the middle of the health care fight, rising unemployment, and a host of other things. Is it as simple as he needed to pay back big labor? Is he trying to completely destroy our country? What explanation makes sense? No doubt this is going to be heralded by liberals as some sort of proof that he's a tough guy and willing to stand up to China.
The thing is, though, we have already put ourselves in such an incredible position of weakness with China that I don't see how we can be tough with them about anything until we start cutting spending and paying down the deficit. Obama's plan here is a little bit like walking up to the loan shark you haven't even begun to pay back yet, spitting in his eye and then smirking. Is that going to work? Hillary Clinton already went over there and begged them to buy more of our debt. Plus, how does Obama plan to fund Obamacare without a fully cooperative China to help out with all that increased debt that goes along with the price tag?
Also, protectionism is not going to revive the U.S. tire industry and make everything be well-run and profitable. If anything it will probably make it worse because these union-heavy companies will know that they no longer have any competition. And remember this strategy is the reverse of the Jedi mind trick the left is trying to play on us with health care and cap & trade, which is that the free market works as long as it's not free. This belief is the crux on which Obamacare and cap & trade are built. In one area, the theory is that cutting off access to fossil fuels will inspire the market to magically pull new technology out of its ass. For the other, it's that creating a government health care system (or "injecting competition" into the marketplace, depending on your rhetoric) will lower costs and increase quality of care. But, in the case of the tire industry, decreasing competition and jacking prices up will actually help everybody out. Which one is it, morons?
The big question right now is what will China do? They've already started an anti-dumping probe into U.S. poultry and auto products, but what will the result of that be? I don't see how they won't try to do the economic equivalent to us of breaking our legs with a lead pipe. Now they do have some peripheral drama going on, too, that may affect their decision, but I will be floored if they just take this lying down and don't retaliate. At the same time China is mulling this over, the United Steelworkers union (the same group that got the tire tariff increase) is just getting started:
U.S. Steel Corp. asked the U.S. Commerce Department to impose dumping and anti-subsidy duties of as much as 90 percent on some Chinese steel pipe imports, days after the Obama administration set tariffs on Chinese tires.By the way, this showdown has been simmering since before last Friday. Things certainly seem to be coming to a boil now. Please make sure your seat belts are securely fastened. It's going to get a little bumpy with Cap'n Barry at the helm.
The petition was filed with the U.S. International Trade Commission against $400 million in imports of pipes used in chemical, petrochemical, refineries and related operations, according to Roger Schagrin, a lawyer for the U.S. producers. The U.S. imposed tariffs this month on a different type of steel pipe from China in a separate case.