By on September 17, 2012

President Barack Obama will carry a familiar gift to election rallies in Ohio today.

“The Obama administration will announce a trade complaint against China today as President Barack Obama campaigns in Ohio, alleging impermissible subsidies of auto- and auto-parts exports that encourage outsourcing to China from the U.S.” an administration official told Bloomberg.    

According to the report, the U.S. will accuse China of $1 billion in illegal subsidies between 2009-11.

This wag the dog trade war has a rich tradition. In July, the United States reported China to the WTO over extra duties on more than $3 billion worth of cars imported from the U.S. This also coincided with Obama campaigning in Ohio.

While UAW members will love to hear the new salvos in a trade war with China, car-makers will flinch. Their profitability, and large parts of the viability of U.S. production, hinge on the importation of cheap Chinese parts. It was Detroit that spearheaded outsourcing to China, often to factories owned by Detroit car companies. Especially the viability of GM depends on good relations with its largest market China .

The industry believes and hopes that this is mostly pre-election theater. Would the Obama administration be serious, it could easily slap a punitive tariff on Chinese parts instead of going the long and winded WTO route.

According to  Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group  and former World Bank employee, the “rhetoric will likely be toned down following the polls, as the competitiveness of the U.S. auto industry will suffer should they impose sanctions on imports of relatively cheap Chinese parts.” Also, the Chinese will point out that the bailout of GM alone was more than 50 times bigger than their alleged illegal subsidies.

What is discouraging is how readily this nonsense is consumed. Raising tariffs would raise the price of U.S. made cars, hitting consumers in the wallet.  To compete, cars would have to be made in  Canada and Mexico, which don’t have these tariffs. More jobs would get lost. Eventually, production of Asian car parts would migrate to other low cost countries.

Today, China files a  counter complaint abolut close to 30 products that have previously been targeted by U.S. duties. According to the WTO, the products include steel, tires, magnets, chemicals, kitchen appliances, wood flooring and wind towers.

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24 Comments on “Trade War Watch 22: Obama Wags The Dog, Drags China In Front Of WTO Again In Ohio – Again...”

  • avatar

    This nonsense afflicts both parties. Romney has said that on day 1 he will label China a currency manipulator. So it goes both ways.

    • 0 avatar

      “What is discouraging is how readily this nonsense is consumed. Raising tariffs would raise the price of U.S. made cars, hitting consumers in the wallet. To compete, cars would have to be made in Canada and Mexico, which don’t have these tariffs. More jobs would get lost. Eventually, production of Asian car parts would migrate to other low cost countries.”

      Canada is hardly a low cost country to build things and China is losing it’s low cost edge anyhow.

      BTW, Go Bama beat the vulture capitalist like a running dog!!!

      • 0 avatar
        George B

        Bill, you’re missing the point. The US auto manufacturers have already set up their own set of low-cost part suppliers in their largest market, China. Part manufacturing is not coming back to the US. If there is a US-specific tariff on made in China auto parts, but fully assembled cars can come into the US from NAFTA countries Canada and, more importantly, Mexico without that extra part cost, then there will be a strong incentive to shift the final assembly from the US to Mexico or Canada.

      • 0 avatar

        “Go Bama beat the vulture capitalist like a running dog!!!”

        So you’re saying you want Obama to eat Romney?

        P.S. Buckhead as in Atlanta, right? Congratulations, thanks to the electoral college, your vote is essentially irrelevant in November.

      • 0 avatar

        I wrote, “Obama bragged about eating dogs,” on the paper sleeve of some chopsticks and left them on the windshield of a car that some simp put two “My Dog Rides Inside, Don’t Vote for Mean Mitt!” bumper stickers on. I wonder if he really didn’t know. There are people that think there is no liberal media bias in this country, which demonstrates their quality of thought quite effectively.

      • 0 avatar

        @CJinSD: Well done, sir.

        Of course, I can’t put a pro-Romney sticker on my car, because I expect the response to be less snarky and more destructive. A Bush-Cheney ’04 sticker on my back bumper resulted in two broken taillights on November 3rd. I like my current car too much to subject it to similar treatment.

      • 0 avatar
        Volts On Fire

        I’ve thought about carrying a can of “Flex-Seal” aerosol rubber around to properly respond to Obama ’12 stickers.

      • 0 avatar

        Wow, chopsticks! aerosal cans!

        You guys are wicked classy!

      • 0 avatar

        “There are people that think there is no liberal media bias in this country”

        The fact that this entire issue even rises to the level of “controversy” pretty much proves that there is none.

      • 0 avatar
        Dr. Claw

        @PintoFan: Yep.

        if the media truly had a “liberal” bias, we wouldn’t have people reporting in the “he said-she said” manner that we do on nearly every major news outlet in the United States. it’s one of the most effective myths of American political theater.

  • avatar

    This is a perfect issue for the Obama regime. It excites his ignorant supporters and hurts the US at the same time. He’s crying with joy inside.

  • avatar

    This election cannot pass one day too soon. I expect that people who are normally intelligent are going to heat up this thread with comments that malign conservative/progressive ideologies. It’s been a while since we’ve had a typical repub/demo election at the national level. Even the German newspapers got into it with an Arab spring comment or ten. Meanwhile I’ll just sit here in retirementville and watch prices rise and hope it’s all over soon.

  • avatar

    This election cycle can’t end soon enough. Both candidates are pushing this flawed populist anti-China rhetoric for no other reason than to appeal to a scapegoat seeking demographic that don’t understand much about trade.

  • avatar

    crunch crunch crunch

    What’s behind this door.

    Oh man, what is that smell? It smells like the biggest piles of manure ever.

    OH MY GOD.

    Must be a political discussion.

    Close door

    crunch, crunch, crunch

    Let the feast of a thousand popcorns continue

  • avatar

    The Chinese can ask the Japanese how to handle this. “Voluntarily” offer to limit certain exports, then continue business as usual. China gets to keep making money and American politicos get to claim they saved ( insert inflated number here ) jobs. Everybody wins! Well, except for the poor schlub who lost his job to a Chinese worker, but who cares about him.

  • avatar

    Does this mean Ford will do away with the MT82? If Pres. Obama can make this happen he has my vote!

    On a more serious note I do wish car manufacturers would list the country of origin by percentage on the window sticker so that I could be better informed as to where my car is truly from.

    I go out of my way to avoid purchasing products made in China for a variety of reasons so having this knowledge readily available would be useful and would certainly factor into my purchase decision.

    • 0 avatar

      GM, VW, Ford, Hyundai, and BMW are probably the top 5 for Chinese content in US products. Some Japanese brands would have made the list last week, but are probably safe for you now.

  • avatar

    God forbid you question the flawed “free trade” paradigm in the first place. Or that prices of new cars reflect the real cost of producing them. Or that (horror of horrors) we have an American content law with teeth.

    The entire article is nothing as much as showcase of how arrogant and complacent the “free trade” establishment has become.

  • avatar

    “Unfettered importing” and “trade” aren’t the same concepts.

    “Trade” requires that one actually trades things. Which is to say that a nation would also export goods to its trading “partners”, and not just import them.

    Likewise, a country that engages in trade would not just sell things abroad, but would also imports products from abroad in some amount that is commensurate with its exporting.

  • avatar

    I have no issues with the manufacturers moving to other low cost production companies.

    Production in China is a longterm losing proposition with IP theft and management processes being the true goal of all the Chinese businesses.

  • avatar

    Obama is stupid. There is no way around it

  • avatar

    Free trade is a doctrine based on the old white power/superiority racist/xenophobic belief.

    Now the that truth has been exposed that chinese can do more then silk, indians more then grow spice, brazilians more then grow coffee they top politicos don’t know what to do.

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