Reason Writers Around Town: Shikha Dalmia in Business Week on the Specter of Protectionism


Reason Foundation Senior Policy Analyst Shikha Dalmia notes Treasury Secretary Tim Geithner's anti-China rhetoric during his confirmation hearings and writes in Business Week:

Protectionism is exactly the wrong remedy for a global economic slump—as the 1930 Smoot Hawley tariffs amply demonstrated. Historians widely credit the tariffs—and the global trade war they unleashed-for prolonging and deepening the Great Depression. But it is unclear to what extent [President Barack] Obama plans to heed that lesson, given the decidedly mixed messages he has sent on trade so far.

Obama wrote eloquently about the benefits of free trade and the futility of trying to stop the march toward globalization in The Audacity of Hope. "A tariff on imported steel may give temporary relief to U.S. steel producers," he explained, "but it will make every American manufacturer that uses steel in its products less competitive in the world market." Setting aside Geithner, Obama's economic team is decidedly pro free trade. Larry Summers, the head of the National Economic Council, was a staunch free trader during his years in the Clinton Administration, and former Dallas Mayor Ron Kirk, Obama's U.S. trade representative, has a record of strong NAFTA support….

But even though Obama seems to understand the case for free trade in theory, there are very few trade agreements that he has found acceptable in practice. During the campaign, he repeatedly threatened to renegotiate NAFTA to force Mexico and Canada to accept stronger labor and environmental protections. He voted against CAFTA (the Central American Free Trade Agreement) to register his opposition to Bush's trade policies-even though he stressed in The Audacity of Hope that the deal posed little danger to U.S. workers since the combined size of the economies it covered was no larger than that of New Haven, Conn. And he has vociferously opposed the trade deals with South Korea and Colombia.

Is a trade war a-brewing? Whole thing here.