Readers write in about protectionism and climate change.
David Francis asks, “Would a touch of protectionism do the United States some good?”. He answers in the affirmative. He points approvingly to President Obama’s new tariffs on Chinese tire imports beginning at 35 percent. Of course, that action is a transparent payoff to a political constituency: organized labor.
Never mind that it raises the price of tires to American consumers by 35 percent and shields an inefficient domestic tire industry from healthy foreign competition. It’s a tax, paid for by American importers, which kills the incentive to purchase Chinese tires. It also kills jobs in China held by young people who have left communes in rural China and traveled hundreds of miles in search of work to help their families. Many fathers at home on the farm in China, I imagine, will worry about their sons and daughters finding jobs in the city as tire factories lay off workers.
Mr. Francis goes on to flip another “solution.” He cites a recent suggestion: “The US should start buying Chinese yuan on the foreign exchange markets.... That would push up the price of Chinese goods.” Indeed, it would. This would leave the Fed with balances in Chinese banks and leave us with billions of newly printed dollars surging through our domestic markets, causing inflation. The American consumer would take it on the chin again.