“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Monday, September 14, 2009

Obama focuses on tire trade with China

China is not a free trader. China is a ruthless trader. China uses every possible manipulation with its currency. It subsidizes transportation and it targets industries not just to compete but to destroy. China conducts a neo-mercantlism that puts its "trading partners" at risk. China does all of this because they can and it works to China's benefit.

China uses its new found wealth and industrial might to make strategic decisions worldwide that are not in US political, military and economic interest.

Is Obama right?


China: Tire tariffs may cost 100,000 jobs

Published: Sept. 14, 2009 at 2:46 AM

BEIJING, Sept. 14 -- U.S President Barack Obama's decision to slap tariffs on Chinese tire imports will hit that country's industry hard, the head of a Chinese trade group said.

"Obama's decision may affect the employment of 100,000 tire workers in China and may bring an aggregated loss of $1 billion to China's tire exporters," Fan Rende, chairman of China Rubber Industry Association, told the China Daily.

Obama said he made the decision to impose tariffs up to 35 percent based on the U.S. International Trade Commission's conclusion that a surge in Chinese-made tires had cost thousands of U.S. jobs.

In response to the White House decision, the Chinese Commerce Ministry has announced anti-dumping and anti-subsidy investigations against U.S. automotive and chicken product imports.

The high duties may prevent Chinese companies from exporting tires to the United States, Fan said. China has 20 tire companies, including four U.S.-based companies that operate there, the report said.

Fan said in addition to sending a complaint letter to President Obama, his group, along with other companies, are considering taking their case to the U.S. Court of International Trade.

Separately, Chinese Commerce Minister Chen Deming said the U.S. decision amounted to "grave trade protectionism" that will send a wrong signal to the world, Xinhua news agency reported.

Chen said China reserves the right to bring its case to the World Trade Organization, Xinhua said.


  1. Ah, the siren song of protectionism. Tis a sweet melody, indeed. Especially when times are hard.

    Thank God for the WTO. Now, we'll wool it around in "mediation," and technicalities for a couple of years, and all "political" needs will have been satisfied.

    The WTO, and NAFTA; Two incredibly important pieces of work.

  2. Typical US free trading talking bullshit. 'Yeah, Yeah, go free trade, go free markets' but the reality is totally different if the local US lobbyists and unions notice that they get the short end of the stick due to their failure to compete in a free market. Notice in the China case that the underlying cause of the trade action is due to a surge. Ironically US tire companies oppose the tariffs but the Steelworker Union has Obama's ear. That and the protectionist Lou Dobbs crowd. I guess we can through 2164th in there as well. Yay, workers unite!!

    Just another salvo in the escalating trade war. Heck, NASCAR can afford more expensive tires anyway...oh yeah, they buy the high value ones manufactured domestically.

  3. I am not opposed to free trade. I have been to China and visited many factories.

    I have imported from China. Shipping rates from China are unbelievably cheap. If you send proprietary engineering drawings to a Chinese company, They will be in the public domain before you get hungry for lunch.

    The Chinese government will do nothing about that. You can find any name brand of anything in China, all knock offs.

    China will target a domestic industry and shut it down.

    American companies do not have equal access to Chinese markets.

    That in my opinion is not free trade, no more than buying stolen merchandise is justifiable because it is cheap.

  4. none of what you state in that last comment has been alleged with regard to the tires only that there has been a surge. Maybe they'll try to up the beef to dumping but so far they are simply whining about a surge.

    Yes copyright infringements, theft, and subsidies are a problem. China is hardly alone with regard to those sins.

    It is just one more protectionist move by the US. Retaliation is likely, and not just from China. In Canada there is a growing movement to formally strike back at the Buy America clause and this latest action suggests that the Buy American provisions are not the one-off temporary 'political' things that Obama said they were.

  5. Canada is unique in that it sells China raw materials, and not much else. Canadian manufacturing is not as important to Canada as are her extraction industries.

    That is not the same in the US.

    Many US manufacturers produce in China because of US laws, taxes and work rules. That is the fault of the US government.

  6. That is true regarding Canada however that is not the point. The point is with respect to free trade world wide. The US has talked a good line but when it has trouble competing it has a tendency to not do what it asks other to and it appears that protectionist sentiment is continuing to grow arguing, as you have, on how 'important' manufacturing is to the US economy - i.e. jobs jobs jobs. Subsidies and tariffs continue to increase. Hardly what one would call free trade.

  7. Aww, Ash, no one's perfect.

    Seriously, trade is a very complex issue. Grown-ups "should" be in charge.

    We can't be "too" protectionist, running a $700 Billion/Yr Trade Deficit.

  8. As you've noted a large part of the trade deficit is due to the importation of oil.

    There has been a long sustained quest for free trade world wide with agreed upon rules. NAFTA, WTO, ect. It gets really irritating, and counter-productive toward the free trade goals when the US, a main driver of free trade doesn't abide by the trade body rulings (Soft Wood lumber for example) and more recently starts to reverse direction - Buy American, China Tire Tariff as two overt examples of recent protectionist move. Combine that with the subsidies, corporate welfare, given targeted industries (Auto industry, Financial institutions, Insurance) and the reluctance to decrease agricultural subsidies (failure of the DOHA round of talks) and the future isn't looking to bright for free trade.

  9. Are you a free trade advocate, Ash?

  10. Deemocracee is hard, ain't it?

  11. yes Ma'am, Trish, I've been a free trader for a long time. That was one area where I agreed with the last administration though I often felt their rhetoric didn't quite match the actions.

  12. That's what I thought I remembered, back from my days cutting and pasting from, but I needed reiteration.

    Yes, the Bush admin was far from consistent on trade issues, and the Clinton admin did yeoman's work in what was at the time a more challenging political environment in that regard.

    We're never going to be anywhere near the vision of unfailing free traders hoped for by many. The ambivalence and skepticism with regard to the very concept - and the electoral politics of the matter - run too deep.

    At the same time we live in a world of transformative global trade and that's a cat that, barring some unimaginable catastrophe, will never be walked back.

  13. As to declining ad revenues from print sales ...

    That has more to do with declining readership in the primary target markets. Newspapers and magazines losing market share to cable TV and the INet.

    The younger more targeted consumer spending even less time and effort on pulp wood products than the older folks.

    This trend does not seem to be effecting "twitter", "google" and cable TV. It is much more cultural than content driven, as seen from here, living amidst the trends in revenue declines in the pulp wood publishing business.

  14. Everyone else is a protectionist, but when the US does it, it's bullshit.

  15. 2164th, I have to agree with all you're points on trade with China.

    I spent a few years on a team setting up joint ventures in China. Anyone who believes there is a level playing field in trade between our two countries is naive.

    However, the argument is irrelevant. The U.S. in setting up the tarriffs merely did what it was allowed to do under WTO rules, rules that China also signed onto. Will this turn into a full Scale trade war? Doubtful.