Sep 25, 2009
With all the noise coming out of Washington focusing on healthcare, cap and trade, and financial regulation, it is easy to forget about some other serious issues that need attention. This Congress and the Obama Administration are taking us down a dangerous path of trade conflict.
There is powerful pressure in Congress to deny imports of Chinese chicken. Now, the Chinese have cut back on the imports of our chicken.
President Obama imposed a 35% tariff on Chinese tires. What do you think the Chinese will do? They will retaliate by not buying any chickens. Soybeans could be next. They have added auto parts to the list. We’re not going to get ahead by picking trade fights.
Do you remember when President Bush imposed tariffs on steel in 2001? Russia retaliated by closing the door on a long list of our ag products. It was devastating. Presidents do these kind of things to appease their constituents. President Bush was listening to our steel industry suffering from the last recession. President Obama and this Congress are tied to the labor unions. They are protectionist.
This back and forth, tit for tat, can escalate. The steel tariff imposed by President Bush was a big mistake, but he later made up for it by writing and negotiating a series of bilateral trade agreements. President Clinton, over union labor objections, pushed most favored nation trading status for China and wrote bilateral trade agreements.
Let’s face it. We are part of a global economy. Trade restrictions hurt everyone.
This Administration and Congress have abdicated our trade leadership. The Colombia, Panama, and South Korean trade agreements sit on the shelf. No action. Congress passed a bill to ban Mexican trucks on our highways. That is a direct violation of NAFTA. The U.S. Energy Secretary wants to impose a carbon tax on imports.
Countries around the world are fighting their way out of the global recession. The easy political payoff is to shut the door on some imports and take political credit. We could lose control of that game and end up in a real trade war. It is time for the USA to show some leadership on trade.
Until next week, I am John Block from Washington, D.C.