Trade Wars & US Foreign Policy

by Jacob G. Hornberger
Tuesday, January 5, 2010
Courtesy Of The Future Of Freedom Foundation

For those who think that the U.S. Empire is good, holy, sacrosanct, and above reproach when dealing with foreigners, here is a little bit of reality for you.

Last September the Obama administration suddenly imposed an enormous 35 percent import fee on tires imported from China. The fee was apparently a sop that President Obama was paying to U.S. labor unions in payment for their help in the presidential election.

Among the people who pay the price for this post-election payoff are American consumers. They are now denied the opportunity of purchasing low-priced tires from China.

Equally obvious, however, is the adverse effect on Chinese tire-makers, who face a tremendous falloff in sales as result of the political increase in the price that Americans must now pay for Chinese tires.

Not surprisingly, the Chinese government didn’t take the matter lying down. Two days after Obama’s action, China threatened retaliation against “predatory dumping” of U.S. chicken products and auto parts. In October, China hit the United States with duties reaching 36 percent on certain nylon products.

Obama’s people then retaliated against the Chinese retaliation by imposing anti-dumping duties on Chinese steel pipe, and threatened duties on other Chinese imports.

One day later, the Chinese threatened import duties on the American automobile industry, the pride and joy of Obama’s socialist bailout scheme. China also imposed tariffs ranging from 5 to 35 percent on industrial acid used to produce nylons and medicine.

Who started this trade war?

Well, any ordinary person would say that the U.S. government started it with President Obama’s apparent payoff to U.S. labor unions in the form of steep import duties on Chinese tires.

But there’s an obvious problem with that conclusion, at least from the standpoint of U.S. officials: it involves blaming the U.S. government for doing something bad to foreigners. And that’s a super no-no in the eyes of officials of the U.S. Empire.

You see, in the minds of Empire officials, the Chinese government bears all the blame for the trade war. Why? Because when the U.S. government imposed the import duty on Chinese tires, the Chinese government should simply have meekly submitted and not retaliated. In the minds of Empire officials, that’s what foreigners are supposed to do. Empires dictate and rule, and subjects are supposed to fall into line.

(Of course, the best thing China could have done economically, especially for its own citizens, was not to retaliate with protective tariffs, but let’s leave that point aside.)

The trade dispute with China is also the way the Empire works in other areas of foreign policy, including its assassinations, coups, sanctions, embargoes, orders, edicts, invasions, occupations, torture, and so forth. When the Empire does these types of things to foreigners, they are expected to meekly accept what has been done to them and move on. They are not expected to retaliate and if they do retaliate, they are hit with severe and overwhelming retaliation at the hands of U.S. officials. And as the retaliations increase on both sides, Empire officials exhort the American citizenry to support their government in its efforts to extinguish the “bad guys,” i.e., those who had the temerity to object to the bad things the Empire did to them in the first place.

Traditionally, the Empire issues its dictates and edicts against weaker countries, that is, those that lack the means to retaliate effectively against the Empire. Despite China’s growing economy, the probability is that the trade war between the U.S. and China will hurt the latter much more than the former. However, that ignores one crucial element: the Chinese government is now the U.S. government’s largest foreign creditor, having been one of the principal funders of the Empire’s invasions and occupations of Iraq and Afghanistan. It’s never wise to antagonize someone you owe lots of money to.

If the Chinese decide to play rough, they might well decide to simply take their lumps and suddenly dump all their holdings of U.S. debt instruments onto the market, an event whose adverse consequences for America would be impossible to calculate. In fact, immediately after the tire-import fee that Obama imposed, Chinese citizens on the Internet were calling on their government to start dumping its enormous holdings of U.S. Treasury bonds.

When will the American people finally come to realize what the Framers realized: that the major threat to their freedom and well-being lies with their very own federal government, not only with its socialist and interventionist policies at home but also its imperial and interventionist policies abroad?

Hornberger’s Blog Archives

Jacob Hornberger is founder and president of The Future of Freedom Foundation. Send him email.