As the G20 meets in Pittsburgh, many will be looking to the United States and the Obama Administration to outline its trade policy. President Obama claims to be a supporter of free trade, saying it is vital to the economic health of our nation and he has repeatedly called for countries to avoid protectionism. Unfortunately, those encouraging words are being followed up with less encouraging actions when it comes to trade under this Administration.
First came “Buy American” in the stimulus bill, requiring manufacturers to give preferential treatment to domestic producers of iron, steel and other manufactured goods in building contracts and other spending, forcing taxpayers to pay more money for the same goods that could be purchased more cheaply from foreign manufacturers. What followed were similar actions by countries such as Australia, Canada, and China.
Then, bowing to pressure from organized labor, Congressional Democrats included within the omnibus spending bill a provision to end the pilot program to allow Mexican trucks to ship goods deep within U.S. borders, violating our obligations under the North American Free Trade Agreement. In retaliation, Mexico announced it would raise tariffs on 90 U.S. agricultural and industrial products, worth more than $2.4 billion in American goods exported to our southern neighbor.
Continuing on, we have stalled free trade agreements with Panama, Colombia, and Korea. Both the Panama and Colombia FTA would level the playing field by removing trade and investment barriers that have hindered American exports to those countries. While eighty to ninety percent of imports from those countries are duty free, U.S. products still face tariffs when entering Panama and Colombia. Additionally, the U.S. International Trade Commission estimates that enacting the Korean FTA would increase U.S. exports by $10–11.9 billion. These agreements will eliminate trade barriers and open new markets for U.S. products.
Most recently and again appeasing organized labore, Obama made the decision to place a 35 percent tariff on tire imports from China. The families hardest hit by this tax increase will be low-income families, since tariffs will be applied to low-end tires, costing $50 to $60 as opposed to the $200 to $250 paid for premium tires. As a result, Americans can expect to see a 20 to 30 percent increase in the cost of tires.
So what exactly is Obama’s view on trade and where is the free trade portion he claims to favor over protectionism? Unfortunately, this administration’s actions have sent a message to the American people that the interests of union supporters, too fearful to compete in the marketplace, are above the interests of consumers.