Free Tread
Derek Scissors /
President Obama has decided to apply heavy tariffs to passenger car and light truck replacement tires made in China. This is the latest and worst episode in an ill-advised assault on free trade with the PRC.
Taking WTO-compliant steps to counter Chinese subsidies or other mercantilist behavior is entirely reasonable. (That doesn’t mean any WTO-compliant action is a good idea — the “Buy America” provisions passed as part of the stimulus package may be WTO-compliant but are still terrible policy.) The problem here is that American actions are occurring in a policy vacuum. Our actions appear to be driven by domestic politics, a dangerous development given the importance and complexity of our trade with China. (more…)