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First Strike in a Trade War?

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Thursday, September 17, 2009

In an economic debate measured by staggering multibillion-dollar sums and unemployment figures logging in the hundreds of thousands, the stakes in the rubber tire import dispute with China seem stunningly small.

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The government's International Trade Commission reported that a surge of Chinese exports of low-cost tires has cost U.S. workers 5,000 jobs. On the basis of that report, President Obama slapped tariffs, beginning at 35 percent, on Chinese-made tires.

By itself, the issue seems hardly important. But like a pebble in the shoe, the irritation it has caused and the ramifications of the dispute may have greater consequences.

The case against the imports was filed by the United Steelworkers union, an important political ally of the president and congressional Democrats -- especially those whom Obama is laboring to keep on board for his landmark health-care legislation.

Many in business fear that this is the opening round in what could become a much larger and more dangerous trade war.

For now, the Chinese have threatened only minor retaliation, a cutback in imports of auto and chicken parts from the United States. But both sides have plenty of other, larger weapons they could deploy.

Obama told a Wall Street audience this week that is not where he is headed. He noted that the Chinese had agreed, as part of the negotiations allowing entry into the World Trade Organization, that the United States could clamp down on "surges" of imports without having to prove unfair trade practices. The surge is real -- a tripling of tire imports in a few short years -- and Obama said he is simply enforcing the rule the Chinese had accepted.

But as always with trade disputes, the story is more complicated. Most of the Chinese tires that will be penalized are made in four American-owned factories over there. American tire manufacturers have moved to the high end of the market. The likelihood is that if the Chinese imports are blocked, other low-wage foreign countries will replace them.

The larger question is what this decision tells us about Obama's approach to trade. In the campaign, he was deliberately murky, promising to expand exports but at times endorsing plainly protectionist measures. Since the election, we have heard nothing about his demagogic promise to renegotiate the North American Free Trade Agreement. But his administration has not pushed for action on pending trade agreements left over from the George W. Bush years.

Bill Clinton was similarly mushy at the start, but in the end he became a strong advocate of expanded world trade. The powerful forces reshaping the global economy will probably push Obama in the same direction. But his party is increasingly skeptical about the benefits of trade, and he is likely to duck and dodge more than he sets a straight course.

The danger is that once you strike the first blow against foreign competitors, you can't tell what will happen next. Obama has taken that risk, so fingers are crossed.

--

Jody Powell, the Carter White House press secretary who died this week after a heart attack at 65, was one of those blithe spirits whose personality did much to lift the clouds of controversy that envelop Washington. Arriving with the former governor from Georgia, Powell more than anyone else in the Carter administration made an effort to become part of the capital's political and journalistic community. His weapon of choice was his impish sense of humor, which did not dim his strong partisan and personal loyalties but enabled him to make friends among many who never overcame their skepticism about his boss. Candid, canny, convivial, he deservedly became one of the most popular public figures in this city.

davidbroder@washpost.com



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