The tire tariffs and trade diversion

Via The Economist

International trade lawyer Scott Lincicome has a fantastic post about the recent decision by the Obama Administration to impose tariffs on Chinese-made tires. While a bit lengthy it can be distilled down the following points:

• Tariffs on Chinese-made tires does not necessarily mean that American workers who produce tires will benefit. Rather, tire imports will simply be diverted from China to other low-cost producers, most notably Brazil.

• US Trade Representative Ron Kirk is on record as acknowledging this fact.

• Under Section 421 President Obama could have chosen to ignore the petition for tariffs on Chinese imports if he could show that the costs of the action would outweigh the benefits.

• Given that foreign manufacturers, not U.S. workers, will benefit most from the tire tariffs -- by the admission of his own USTR -- the notion being advanced by the White House that President Obama really had no choice but to impose tariffs is simply wrong.

The longer one considers the decision to impose tariffs on Chinese tires the worse it looks.

This is a great blog that I have only just discovered, full of other excellent posts worth reading for those with a serious interest in international trade.