Obama’s Tariff On Chinese Tires Cost Americans $1.1 Billion In Higher Prices

CHINA-US-CONSUMER-RECALL-FILES

Gee, thanks President Obama:

In his 2012 State of the Union address, President Obama claimed that “over a thousand Americans are working today because we stopped a surge in Chinese tires.” The tire tariff case, decided by the president in September 2009, exemplifies his efforts to get China to “play by the rules” and serves as a plank in his larger platform of insourcing jobs to America. However, our analysis shows that, even on very generous assumptions about the effectiveness of the tariffs, the initiative saved a maximum of 1,200 jobs. Our analysis also shows that American buyers of car and truck tires pay a hefty price for this exercise of trade protection. According to our calculations, explained in this policy brief, the total cost to American consumers from higher prices resulting from safeguard tariffs on Chinese tires was around $1.1 billion in 2011. The cost per job saved (a maximum of 1,200 jobs by our calculations) was at least $900,000 in that year.

That’s $1.1 billion that Americans could have spent on improving their lives, but were instead forced to pay for tire prices inflated by Obama’s trade protectionism.

Trade protectionists always like to focus on jobs supposedly lost ignore one aspect of free trade that benefits all consumers: Lower prices thanks to an expanded marketplace. While companies are often vilified for moving manufacturing and other parts of their operations to different countries, they do it because that saves them money. And saving money allows them to keep prices down.

In fact, I’d say that free trade is one reason why inflation hasn’t had more of a devastating impact on our quality of life. According to the inflation calculator provided by the Bureau of Labor Statistics (which many will argue underestimates the impact of inflation) a $50,000/year salary in 2012 dollars would have been worth only $17,804.13 in 1980 dollars. Yet, despite that decline in the value of our currency, Americans aren’t living at a lower standard. If anything we’re living in a higher standard.

One explanation is the explosion in personal debt. Far too many Americans are living beyond their means. But another explanation is that stuff has gotten cheaper thanks to free trade and other market advancements. We can afford more stuff, because more of that stuff is made cheaply in places like China.

Thanks to our global economy, we can afford to live better lives even as the value of our money plummets.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters. He writes a weekly column for several North Dakota newspapers, and also serves as a policy fellow for the North Dakota Policy Council.

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