Tire tariffs show another cost of cap and trade: Free trade

Climate change legislation will impose many costs on U.S. families. Now you can add more expensive tires to the list.

Congressional leaders and the White House have cut many deals to win backers for the push to curb greenhouse gas emissions, and President Obama's imposition of tariffs on Chinese-made tires looks like the latest sweetener in this great honey pot of a proposal. But it's also the latest hit to the wallet of the American consumer, who will now pay more for his tires.

Obama has invoked Section 421 of U.S. trade law — a flexible rule allowing the president to impose tariffs on specific imports if a “surge” in those imports has created a “market disruption” for U.S. manufacturers — to slap tariffs on tires made in China.

Presidents have used this provision selectively, and always with some political angle in mind. Considering that with this move Obama is wounding U.S. automakers by making tires more expensive, it's worth asking why he did it.

If you're looking for Obama's main motivation in his decision to punish China's tire makers (and thus America's tire buyers), you'll find a good clue in the news release Sen. Sherrod Brown, D-Ohio, sent out on Friday. Brown praised Obama for “courageously … protect[ing] America's workers.”

Brown went on: “Rigorous trade enforcement is a major piece of our manufacturing and global competitiveness strategy. If American workers and manufacturers are going to compete in the global market, they need to have a government that uses trade enforcement tools.”

This effusive praise is more interesting when you remember that Brown is a leading Democratic holdout on Obama's push to cap greenhouse gas emissions. A carbon cap, which would effectively create a new tax on coal and manufacturing, threatens Ohio's already wounded economy.

There's no sign a quid pro quo was cut — Brown's office was still voicing reservations about cap and trade on Tuesday. But these Section 421 tariffs are historically payoffs to manufacturing-sensitive lawmakers.

President George W. Bush used these tariffs to protect American steelmakers from competing against the Chinese. Bush's top aide, Karl Rove, admitted that this was a sop to Rust Belt congressmen in exchange for their votes on a provision they otherwise would have opposed: a rule called Trade Promotion Authority that guarantees expedited congressional consideration of trade agreements negotiated by the president.

So is Obama buying Rust Belt votes — specifically Brown and Sen. Evan Bayh, D-Ind. — on cap and trade? Last year, Brown voted to filibuster a cap-and-trade bill, saying, “I could not settle for this legislation because it may hurt my state.” Though he hasn't committed to voting for the bill, he told the blog Talking Points Memo, “I'm not going to be part of a filibuster on climate change” again.

The deeper you look, the more the tariffs look like an effort by Obama to win over the Rust Belt and the manufacturing sector. The most direct beneficiaries of the tire tariffs are the unions representing tire workers. Keeping out Chinese tires was a priority for the United Steel Workers, which represents tire workers. The union's political action committee in 2008 ponied up $57,000 in independent expenditures on Obama's behalf, gave $20,000 to Brown and his PAC, and an additional $1.4 million to Democratic House and Senate candidates.

Steel companies also got in the fray, backing the tariffs and cheering Obama's decision. Nucor Steel, an opponent of cap and trade, applauded “[t]he Administration's strong action in the Chinese tire case” as a victory for “American workers and manufacturers, and our overall economy.”

Tires contain steel beads and belts, and tires made here use more steel made here. Nucor and U.S. Steel profit from these tariffs, and these companies are cheered in general by Obama's willingness to battle China on trade.

And cap and trade makes a trade war a political necessity, because the policy otherwise will ship U.S. jobs overseas. A trade war may cost jobs, but in a way less traceable to specific policies. In this way — when U.S. politicians claim China is subsidizing its exports by not taxing emissions — carbon caps could become a net short-term winner for manufacturing companies.

Cap-and-trade legislation may not stop the oceans' rise, as Obama has suggested. On the contrary, it may cause a rising tide of prices that lifts the fortunes of the well-connected companies, leaving American taxpayers and consumers drowning.

Timothy P. Carney, The Examiner's lobbying editor, can be reached at tcarney@washingtonexaminer.com. He writes an op-ed column that appears on Friday


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