On Friday, Obama enacted a new tariff on Chinese made tires of up to 55%.  Obama had until this week to make a decision, but decided to act early.  This decision was a true test of Obama’s commitment to free trade.   Right now, I feel the same way as Greg Mankiw, disappointed.   I am a strong believer of Free Trade.  Protectionalism serves some people’s interests, but not everybody.

This is not to say there are not real problems with the U.S. economy and especially in the manufacturing sector, but restricting free trade is treating the symptoms rather than the causes.   The U.S. is like an unemployed teenager going crazy buying video games with his birthday money from his grandparents when he should be looking for a summer job.  Restricting free trade might stop him from buying video games, but it doesn’t help him get a job.

The more troubling aspect right now with regards with the tariffs is that China is looking to retaltiate with restrictions on Chicken and Auto Part imports.  If China were to retaliate, we would have few winners and plenty of losers.   A trade war is the last thing we need to see during what are still unertain economic times.