Obama's Disastrous Tire Tariffs

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By Scott Lincicome

In tacit recognition of just how bad a decision the President has made, the White House quietly announced at about 9:45p tonight (Friday) that the United States would impose prohibitive tariffs on imports of Chinese consumer tires under "Section 421" of US Trade Law. Here's the WSJ with the pretty shocking news.

I'm going to leave the substance of the decision itself to my earlier posts and this great new analysis by Dan Ikenson on the case's merits and potential impact. Instead, I want to make absolutely clear just what happened tonight. (Bear with the excruciating detail; it's very necessary.)

First, let's correct the "record" because it will be repeated ad nauseam over the next few days:

(A) Section 421 has nothing to do with "unfair" trade. Its only a determination of whether (i) the subject imports have "surged" and (ii) that surge has injured (i.e., created a "market disruption" for) US producers of like products. Here's the ITC's own summary of China safeguards under Section 421:

Under section 421 of the Trade Act of 1974, the Commission determines whether imports of a product from China are being imported into the United States in such increased quantities or under such conditions as to cause or threaten to cause market disruption to the domestic producers of like or directly competitive products. If the Commission makes an affirmative determination, it proposes a remedy. The Commission sends its report to the President and the U.S. Trade Representative. The President makes the final remedy decision. (For further information, see section 421, Trade Act of 1974, 19 U.S.C. 2451.)
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