Ok, so there's a good chance that imposing a tariff on tires imported from China is bad economic policy. But for many commentators left and right, any assault no matter how trivial on the fortress of free trade brings a response ranging from hand-wringing to apoplectic. Not only is this bad for consumers - it might ignite a TRADE WAR! Oh my God, we must not do anything that might provoke retaliation! Look, China is already retaliating by talking about restricting imports of chicken products - this could lead to another GREAT DEPRESSION!
The opening of trade with China in the 1990s was a momentous act. It benefitted the U.S. in many ways, but also imposed costs on some sectors of our economy. There are good arguments for continuing to restrict trade with China in some areas - (1) while in the end free trade will benefit all, because it comes with costs the opening should be done gradually in order to give US producers time to adjust; (2) China restricts imports of US goods; we can use tariffs as a diplomatic tool to persuade them to adopt a more open trade policy, which will make us all better off in the long run; (3) China's export-driven growth strategy and the exchange rate policy that is an integral part thereof contribute to global macroeconomic imbalances; we can use tariffs as a diplomatic tool to persuade them to modify these policies.
Perhaps the tire tariffs is simply a craven move to pay off Obama's supporters in the labor movement. It might, on the other hand, be part of a strategy to force concessions from China on trade policy that would benefit the U.S. in the long run. (This testimony by Richard Trumka from a few years ago, for example, suggests there's a longer-term strategy than simply protecting jobs in dying industries.) If so, there's no need to panic when every once in awhile our government throws some elbows around. It's how one negotiates with a tough adversary.
Imagine if the same attitude were taken in national security policy. What, Obama has criticized Iran's leaders for its treatment of protesters? MY GOD, WHAT IF THE IRANIANS RETALIATE? THIS COULD MEAN WAR!! CALL OFF THE ATTACK DOGS AND APOLOGIZE!
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