Friday, September 25, 2009

Obama Starts a Tariff War

The tariff hikes on tire imports that Barrack Obama foisted on the US economy two weeks ago has led to major retaliation, not just from the Chinese. German steel tariff hikes have now added to the momentum for protection. It is no accident that Obama has encouraged the Congress not to move forward with reciprocal trade deals that would improve international trade, long stalled in the Democratic Congress.

This moves Obama further and further from the FDR analogy. Recall that Hoover was the great believer in protection. The Smoot Hawley tariff was Hoover's idea. It was passed by Congress in 1930 and signed eagerly by Hoover, who never stopped defending the Smoot Hawley tariff even long after he left office.

It was FDR that gradually moved the US back toward free trade. Obama is a Hoover repeat. He thinks not trading with other countries will be good for us. It won't be good for us and it won't be good for the rest of the world either. For a US economy that remains mired in a major recession, the Obama policies continue to put roadblocks in the way of recovery.