Obama's Tire Ad

As I cringe at the Green Bay Packer’s lackluster performance thus far against the Seahawks, I couldn’t help but cringe even more after seeing Obama’s new campaign ad championing his own protectionist tariff against Chinese tires.  After discussing Coughlin et al.’s article “Protectionist Trade Policies: A Survey of Theory, Evidence and Rationale” in class last week, I agree with Mitt Romney’s statement which Obama attacks.  Obama’s ad quotes Mitt Romney as saying, “President Obama’s action to defend American tire companies from foreign competition…is decidedly bad for the nation and our workers.”  But what isn’t featured in the TV ad is Romney’s overall view of protectionism, one which Coughlin et al. would certainly favor.  Romney states, “Protectionism stifles productivity.”  Sure, a 35% tariff on Chinese tires shielded 1,000 American jobs from foreign import competition, but what good will it do for the economic well being of the entire nation during this time of financial crisis? According to Cornell University professor of trade policy Eswar Prasad in a 2009 Bloomberg Businessweek article, this tariff doesn’t bode well at all.  Prasad claims that the tariff could "easily ratchet up into a full-blown trade war and inflict serious economic damage on both countries.”  Of course the purpose of protectionist tariffs is to protect American jobs, and it’s great to see that Obama “saved” 1,000 American jobs from the terrible beast that is Chinese imports, but the American public needs to look past the sensationalist mudslinging and realize the broader negative effects that protectionist tariffs have on rest of the nation.  Tariffs result in higher prices of the protected good, and as Coughlin et al. simplifies “domestic producers of the protected good and the government gain; domestic consumers and other domestic producers lose.”  A petty analysis of Obama’s ad makes it look as if Obama has the blue-collar sector in his best interest.  Is Obama really that concerned about shielding a meager 1,000 domestic jobs from foreign import competition? Has he considered the overarching economic costs that outstrip the minor benefits?  As this three-year tariff is due to expire, it doesn’t appear that Obama will let that happen, as noted by Huffington Post’s Jon Ward in his recent article, especially now as he campaigns in Ohio, a state known for its many tire manufacturers.  That being said, Obama is embellishing the minor benefits of a protectionist trade policy he enacted in 2009 merely as a move to boost his image, and tarnish Mitt Romney’s with the forthcoming election in November.