Buy American?

President Obama once said he was firmly against protectionism. So did (as recently as April) all the leaders of the G-20 nations. And yet, according to various reports, global trade will contract by 10 percent this year, 90 percent of goods traded worldwide have been affected by protectionism and fully 130 protectionist measures are under consideration by nations worldwide. (Read a Wall Street Journal story here.)
And now, seemingly out of the blue, President Obama is raising tariffs on imported tires from China by 35 percent.

I can’t state this too emphatically — protectionism protects nothing. It ends up hurting U.S. consumers and it leads to unemployment, especially as it triggers retaliation by other nations.
A Global Trade Alert bulletin puts it better than I can. (Find it here.):
“The consequences of a rise in protectionism can be severe. To start with, increased protectionism generates a large variety of market distortions, leading to substantial medium and long-run costs, in particular for the implementing countries. Subsidies to domestic industries – including direct state aid, guaranties and bail outs – artificially push down the costs for local firms, while tariffs or anti-dumping and countervailing duties artificially push up the cost of imported goods and services.”
If the U.S. has problems with unfair Chinese practices, it can take them up with the World Trade Organization. The WTO just barely forced China to stop imposing a more than 100 percent tariff on auto parts unless U.S. manufacturers used at least 40 percent Chinese-made components.
The notorious Smoot-Hawley Tariff Act of 1930 (Reed Smoot was a Utah senator) helped plunge the nation into a Depression. The world has avoided a repeat of that so far, but even this WTO report says there is “slippage” taking place.
Going into the G-20 meetings this month in Pittsburgh, the United States should be the clear champion of free trade. Unfortunately, Obama is sending a very different message.