Was it Worth it Mr. President?

By Scott Lincicome

BNA reports that President Obama held a super-secret, unscheduled meeting with the world's labor union leaders, including AFL-CIO big dog Richard Trumka, on the eve of last week's G20 meetings in Pittsburgh. According to the report, the President received very high marks from the unions; Sharan Burrow, president of the Brussels-based International Trade Union Confederation (ITUC), even went so far as to declare Obama a "champion of working Americans." How sweet. Anyway, it's all but certain that tops among the unionists' reasons for giving the First Worker a big, global thumbs-up was his recent decision to impose prohibitive tariffs on Chinese tire imports under Section 421 of US Trade Law. As I've noted ad nauseam, the United Steelworkers alone brought the tires case, and by imposing the stiff protection, President Obama decided to favor the USW's (and his own) interests over those of American tire producers, retailers and consumers.

Well, over the last week, we've seen three developments that call President Obama's Section 421 decision further into question, regardless of the pre-G20 union lovefest:

(1) Despite Congress' initial efforts last Friday to end the US ban on Chinese chicken imports that began as part of the Obama-signed 2009 Omnibus Appropriations Act, the Chinese Government announced on Sunday that it was formally initiating anti-dumping and anti-subsidy investigations of US imports of chicken parts. As you'll recall, the chicken case, along with one against US autos, was filed in China as an immediate response to the President's Section 421 decision. Now that the case has started, it's essentially on "autopilot" (just like American cases) until China announces a final decision about a year from now. At risk: an expanding foreign market that purchased $722 million in American chicken last year alone - tops in the world.

(2) The Wall Street Journal reported yesterday that tire tariffs' initial domestic effects are starting to be felt. And just as predicted, American tire dealers, retailers and consumers are getting hammered:

Many dealers fear a drop-off in demand. "People have been putting off the purchase of tires anyway," says Bill Trimarco, the CEO of Hercules Tire & Rubber, a private-label tire supply company in Findlay, Ohio. "When the price of tires goes up, [fewer] tires will be sold."

Still, after getting socked with a $325,000 bill per the new tariff earlier this week, Trimarco says the company was forced to raise prices 10% to 15% on Chinese tires. "This is an anti-small business policy. A company like Goodyear won't get hit, but a lot of small businesses will be hard hit," he says.