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Thursday, September 03, 2009

Obama Trade Test

On the campaign trail, Barack Obama played the protectionist card to pander to labor unions and the environmental movement. Since moving into the Oval Office, though, President Obama has been quiet on the trade front.

Quiet is not good, as the U.S. needs to be aggressively pushing for free trade in order to expand opportunities for U.S. businesses, and multiply choices for consumers. Of course, small businesses count themselves amongst exporters (97% of U.S. exporters, in fact, are firms with fewer than 500 employees), importers and consumers of imports.

On August 28, The Wall Street Journal reported: “President Barack Obama has until Sept. 17 to rule on a U.S. International Trade Commission recommendation that the White House put a 55% tariff on low-grade car tires imported from China. The ITC's finding followed a complaint by the United Steelworkers that a flood of cheap Chinese tires in recent years had cost more than 5,000 union jobs.”

In reality, imposing three-year tariffs on Chinese tire imports would accomplish nothing in terms of U.S. tire production or “union” jobs, as U.S. firms do not produce these low-end tires. Instead, consumers, including small business owners, would be hurt due to higher tire prices.

Who will President Obama align himself with – labor unions or the rest of the economy?

Raymond J. Keating
Chief Economist
Small Business & Entrepreneurship Council

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