Quotulatiousness

July 14, 2018

Trump’s tariffs are working

Filed under: Business, Economics, Government, Politics, USA — Tags: , , — Nicholas @ 03:00

Tim Worstall explains that the recent US price hikes in washing machines is exactly what the Trump administration wanted:

The part of import tariffs that all too many fail to understand is that it is consumers being “protected” by them who actually pay them. That is, import tariffs on foreign goods entering the United States are paid by those inside the United States. Or, as we can also put it, Trump’s tariffs are making Americans poorer. This isn’t a known to be desired effect of economic policy.

However, it’s important to note that the real burden doesn’t come from the rise in price of the imports. It’s what the domestic producers do to us all in the absence of that foreign competition which is important:

The clear and obvious effect of import tariffs – Credit, BLS, via Mark Perry and AEI, by permission

    If you’re unfortunate enough to be shopping for a new washing machine, you can thank the Trump tariffs on imported washing machines, washing machine parts, steel and aluminum for the largest three-month price increase — 16.4% from February to May this year — in the 40-year history of the BLS series for Major Appliances: Laundry Equipment that started in January 1978 (see chart above). In the May CPI report (see Table 2), the one-month increase in the CPI for Laundry Equipment of 7.4% in May followed a 9.6% increase in April, and in both months was the largest monthly price increase of any of the 300 individual CPI categories or sub-categories. For the month of May, the 7.4% increase in the washing machine series was twice the increase of the next highest increase of 3.7% for educational books and supplies (mostly college textbooks).

What’s worse than this price rise is that this is planned. This is the desired outcome from the people who imposed these taxes.

July 6, 2018

“That’s what governments are for — get in a man’s way”

Filed under: Bureaucracy, Business, Government, USA — Tags: , , , , , — Nicholas @ 03:00

Veronique de Rugy says that the 4th of July is a good time to reflect on the American Founding Fathers fighting to gain independence from a distant tyrannical government … and the rest of the year is devoted to coping with a less-distant but no-less tyrannical government in Washington:

Consider the oil and gas industry. Over the years, the federal government has adopted many regulations meant to hinder the industry. As Nick Loris, an energy policy analyst at the Heritage Foundation, reminds me, one such regulation is the Merchant Marine Act, also known as the Jones Act, which makes it more expensive to ship oil and natural gas from coast to coast. Then there are the past administrations’ outright moratoriums on drilling in certain areas of America’s coasts, which massively increases the cost of doing business. As Loris notes, there are many costly bureaucratic delays in issuing leases and processing applications for permits to drill (APDs), which stalls production on federal lands. On average, the federal processing of APDs in the last year of the Obama administration was 257 days, while state processing is typically 30 days or less.

Since Uncle Sam has a lot of regulations in place to make the operations of domestic oil and gas companies more costly, why is the biggest beneficiary of loans from the federal government export credit agency (the U.S. Export-Import Bank) the gigantic Mexico state-owned oil and gas company Pemex? Between 2007 and 2013 (the most complete data set we have), Pemex received over $7 billion in loans backed by American taxpayers to buy U.S. goods. Thanks to Uncle Sam, this discounted borrowing power gives Pemex a leg up on its competition with domestic oil and gas companies.

Then there’s the Trump administration tariffs. These import taxes on foreign goods coming from Europe, China, and other countries have not only raised the cost of doing business but also triggered retaliatory measures from foreign governments. For instance, the farm industry is paying a steep price from the tariffs on steel because they increase the cost of farm machinery, lowering profit margins. Farmers are also hurt by the European, Mexican, Canadian, and Chinese governments that have imposed retaliatory export restrictions on U.S. farm products. Many small farms are calling for help to survive. It’s so bad that the entire Iowa congressional delegation sent a letter to President Trump on June 25 in which it called the tariffs “catastrophic for Iowa’s economy.”

Quote in the headline from Firefly episode “Serenity, Part 1”.

June 23, 2018

QotD: The protectionist two-step, Alberta craft-beer variant

Filed under: Business, Cancon, Economics, Quotations — Tags: , , , , — Nicholas @ 01:00

Economic protectionism has two classic rationales. Sometimes, as in the case of Alberta’s clumsy attempt at an interprovincial tariff on craft beer, it is undertaken in the name of defending small, emerging “infant industries” that a government wishes to give time to establish themselves in its territory. And sometimes, as in the case of Canadian dairy supply management, it is done to defend “strategic” industries that have existed forever and that allegedly create an irreplaceable quantity of employment and profits.

Give yourself a gold star if you spotted that these canonical pretexts for trade barriers are contradictory. The inherent promise of protection for “infant industries” is that they will grow up and leave the nest. But, oops: by the time they reach adulthood, they may have become too “strategic” to expose to market forces. Heads, the favoured firms win; tails, the consumer loses.

Of course, on the level of fine detail, the arguments for trade barriers are manifold and complicated. (If you get into a quarrel about dairy, and take the free-trade side, you will find them being changed by your interlocutor every 30 seconds.) Alberta’s program for supporting small brewers has an unclear, touchy-feely small-is-beautiful justification. By design, the tariff applies only to businesses that have no intention of attaining industrial scale. It’s right there in the term “craft brewing,” isn’t it? Whatever the esthetic merits of craft beer, this is surely the deliberate encouragement of what the urbane left likes to calls “precarious” jobs that could be flung into disarray by a bad season, a shift in fashions, or a supply problem.

And, also, it’s illegal.

Colby Cosh, “A court refuses to swallow Alberta’s thinly disguised craft-beer tariff”, National Post, 2018-06-22.

June 17, 2018

Conrad Black – Trump’s not bluffing

Filed under: Business, Cancon, Economics, Government, Politics, USA — Tags: , , , , , , — Nicholas @ 03:00

In the National Post (but linked from his personal website), Conrad Black warns of the danger of assuming that Trump is just blustering on his trade threats:

Justin Trudeau struck just the right Canadian note of our gentle nature but refusal “to be pushed around,” and he predictably will reap the short-term reward for standing up for the country opposite the ideal American bogeyman, the blustering billionaire president who has been a Garry Trudeau caricature of the Ugly American for 25 years. (It is a very incomplete picture, like most caricatures, but it works for Trump and he often cultivates it.) The boycotts of American goods and holidays will be a bonus to Canada economically and the anti-Trump American media will be along within two weeks to lionize doughty Canada like “Gallant little Belgium” in 1914 and “Plucky Israel” in 1947, and it will strengthen Canada’s always fragile self-regard opposite the United States.

On the other hand, Trump isn’t just a blowhard; all his career he has known how to go for the jugular and his reference to 270-per-cent Canadian tariffs on butter is a valid complaint that threatens to tear the scab off this egregious payoff to the comparatively small number of Quebec dairy farmers who mainly profit from it. The same issue was hammered hard by Martha Hall Findlay when she ran for the federal Liberal leadership in 2013 and by Maxime Bernier when he ran narrowly behind Andrew Scheer for the Conservative federal leadership last year. The issue died down after their unsuccessful campaigns, but if Donald Trump is incited to hammer that theme, he will roil the domestic Canadian political waters and English-French relations in the country generally.

Presumably our trade negotiators will not become so intoxicated by the prime minister’s peppy talk and spontaneous popular boycotts of the U.S. that they forget the correlation of forces. An aroused American administration could do serious damage to Canada’s standard of living, and it could be a tempting tactic to expedite more important negotiations with Mexico and the principal Asian and European powers. The United States is now enjoying three times as great a rate of economic growth as Canada (4.8 to 1.5 per cent), has lower tax rates, 11 times as great an economy, and more unfilled jobs than unemployed people.

Behind the peeling façades of Norman Rockwell and Walt Disney, the United States is a monster, and not always an amiable monster. If Canadians are blinded by their visceral dislike of Donald Trump, as the antithesis of Canadian criteria for likeable public figures, they will be exposed to the ruthless pursuit of the national interest that in his own career propelled him from technical insolvency to immense wealth and celebrity and then, against all odds, to control of a great political party and to the headship of the most powerful country in the world. If these talks blow up, the U.S. doesn’t have to settle for WTO rules; it can impose outright protectionist measures. Justin Trudeau has been agile, and the country has responded admirably. But Canadian policy-makers must understand that they are playing for almost mortal stakes with potentially dangerous protagonists who have no sense of fair play and no interest in what Canada thinks of them.

June 13, 2018

Imagine … a tariff-free world

Filed under: Economics, Government, Politics, USA — Tags: , , , — Nicholas @ 04:00

Danny Chabino on what he calls “Trump’s G7 Surprise”:

In what I consider a brilliant move on the part of Trump and his team, instead of initially discussing what tariffs he would increase if x,y and z didn’t happen or if whichever nation wouldn’t reduce tariffs on whatever industry, he simply raised the simple question of why don’t we just not have tariffs at all? It’s brilliant in the sense that it not only shut down all the anticipated arguments, but also placed the world’s leaders in a position of having to awkwardly defend the very idea of tariffs (and subsidies), and they knew they couldn’t really do that. It highlighted the true intentions of the world’s leaders as representatives of the authoritarian nature of almost every existing government in the world today.

Now, please don’t misunderstand this article as me beaming with a Trump glow. In fact, Trump knew full well no one would take him up on such an offer. I do believe if they had he would have followed through, but his next moves will be ones that I believe are the wrong ones. He will seek to raise tariffs, which has always done more harm to the nation raising the tariffs than it has done good that nation. Trump will do just as he has threatened and hurt his own country;’s economy with new tariffs.

What I do enjoy, though, is that all of the world’s major leaders had to essentially admit that they don’t want their people and their economies to be better off. At least not on their own. They want their people and economies to be dependent upon their leadership and their governments. While everyone at the summit knew that the greatest of outcomes would be for all the world’s most powerful nations to exercise free trade, and that this would benefit the entire world in great proportions, that really wasn’t their aim. Their aim was to gain greater power. What an incredible admission!

When given a golden opportunity to end tariffs and increase freedom and prosperity for most citizens of the world, the world’s leaders instead chose to cling hard to their own designs. The world’s leaders know full well that tariffs hurt their own citizens, but they don’t care. Tariffs have never served the function of creating market efficiency, and they have never helped protect a nation’s economy. Instead, they have always been a means for governments to exercise control over huge parts of their own economies, and where there is control, there is power. Politicians and world leaders seek power. It’s like their drug of choice, and they can never get enough of it.

June 11, 2018

Jay Currie says it’s time to light the Bat Signal for … Brian Mulroney?

Filed under: Business, Cancon, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 05:00

I find it hard to believe that things have gotten to the point that anyone, let alone Jay Currie, is looking to former PM Brian Mulroney to pull Justin’s chestnuts out of the Trumpian fire:

In Canada, more specifically Ontario, the destruction of the auto industry would be a full scale, all hands on deck, disaster. Realistically, the auto sector is Ontario’s largest private sector employer and the largest manufacturing sector. Being priced out of the US market would kill tens of thousands of well-paid jobs.

Trump has taken the measure of Trudeau and his tiny, annoying, Minister of External Affairs, Chrystia Freeland and concluded they are featherweights. Which means that Canada is potentially screwed because Trump has no faith in our leadership. You don’t call people dishonest publicly if you plan to do business with them.

It is unlikely that Trudeau will be aware of just how badly he has failed for a few days. The Canadian media are heavily invested in a narrative which has Justin standing up to the big, bad, Trump. Trudeau’s tone-deaf advisors are, no doubt, revelling in the fact they got lots of “gender” language into the communique.

It will take a few days for the more sober side of the media to realize what peril Trudeau has put us in. And a few more for the geniuses in the PMO to figure out that Trump is not playing the same game as they are.

When they do figure it out the question will arise, “What the fuck do we do now?”

As I am quite sure Butz and his posse read this blog I have a simple suggestion.

Normally, I would have suggested they get in touch with Simon Reisman who negotiated both the Auto-Pact and NAFTA. Alas, Reisman is dead.

Second best by a long shot? Brian Mulroney. A man I have next to no time for but who a) managed to get Canadians onboard for NAFTA, b) was a quite successful Canadian Prime Minister, c) is wired into both Trump World and broad swaths of corporate America.

If Trudeau could get Mulroney to do it Mulroney would be going into the US with a serious, well thought out, everything on the table, pitch. Likely starting with first principles – no tariffs, no subsidies, no non-tariff barriers. Be prepared to dump dairy and end transhipment of Chinese steel. And pitch it to the Trump people as the template for the deals which could be made with the EU, Japan, India and so on. (China is a whole other thing.)

The key point here is that Canada has to move, and move quickly, away from the finger-wagging politics of gender inclusion and climate change to a hard-nosed business approach to getting the best deal we can with an America which is now willing to put its own interests first.

June 7, 2018

Trade war with Canada justified because the White House was torched in the War of 1812

Filed under: Cancon, Economics, History, USA — Tags: , , , — Nicholas @ 05:00

Maybe it was intended as a joke, but what else was Trump supposed to say when Trudeau actually asked what actual security threat Canada poses to the United States?

During a phone call with Canadian Prime Minister Justin Trudeau last weekend, President Donald Trump reportedly justified his decision to impose tariffs on Canadian steel and aluminum by invoking … the burning of the White House by British troops during the War of 1812.

At least, that’s what CNN is reporting this afternoon. Here’s how they put it, citing information from “sources familiar with the call: “Trudeau pressed Trump on how he could justify the tariffs as a ‘national security’ issue. In response, Trump quipped to Trudeau, ‘Didn’t you guys burn down the White House?'”

That is, presumably, a reference to the War of 1812, during which British troops invaded Washington, D.C., and set fire to the White House. Despite the war’s name, the burning of the White House actually occurred in 1814. And it wasn’t carried out by Canadians because, well, Canada did not become an independent nation until 1867 — or 53 years after the White House burned.

But, sure, whatever. The War of 1812 makes Canada a national security threat in the year 2018, despite our having been allies for the last century, sharing the world’s longest unpatrolled border, and exchanging more than $620 billion in goods last year. The rationales for war with Canada in Canadian Bacon and South Park: Bigger, Longer & Uncut are more grounded in reality.

June 4, 2018

The economic damage of tariffs

Filed under: Economics, History, Politics, USA — Tags: , , , , — Nicholas @ 05:00

Tim Worstall fisks a recent Pat Buchanan brain fart article on the glories of erecting tariff walls against foreign trade:

Pat Buchanan has been going on for decades about how wondrous tariffs are and if only they were brought back then things would be just peachy. Sadly, this all seems to be based on his not understanding trade, tariffs, nor apparently even history. That’s not a good set of recommendations for a policy about trade and tariffs, one that has been tried many a time in history.

Now, it is entirely true that if we returned to a more Hamiltonian policy era then we’d all be richer. But that wouldn’t be because we had tariffs which paid for government rather than an income or corporate tax. It’s because government would be confiscating a very much smaller portion of what we all produce to pay for itself. If the Feds took 3% of everything we do instead of the current 18% or so then sure, we’d all be richer. But that’s true however that tax is raised.

[…]

His argument is that, protected from foreign competition, American business was able to develop and grow into being world beaters. No, I don’t think this is true – I insist that behind tariff barriers companies stagnate. Indeed it’s standard economics that the medium to long term effects of trade are that the competition from foreigners is what makes the domestic companies stronger and more productive. But put that argument to one side. Assume that Buchanan is correct.

For his conclusion to be correct then it must have been true that the total costs of trade were rising in that time period. Total costs being tariffs plus transport. Only if the total costs were rising was protection rising. The tariffs are only part of the story. And as it happens total protection was falling over this time period. The falls in the costs of transport – for the US externally primarily the steam ship – were greater than the rises in the tariffs. Thus the US was becoming more open to trade at this time when industry was booming and growing to world class levels.

That’s not an argument in favour of trade protection now, is it?

    The U.S. relied on tariffs to convert from an agricultural economy in 1800 to the mightiest manufacturing power on earth by 1900.

Well, it’s also true that what the US was inside those tariff barriers was the largest free trade area in the world. I’m the guy insisting that free trade makes places grow, Pat the opposite. And the place with more free trade among more people than anywhere else grows fastest? That’s a point in my favour, no, not Pat’s? Remember, the US Constitution expressly forbids the individual states from having tariffs between them…..that regulation is left to the Feds who have never imposed them.

    How have EU nations run up endless trade surpluses with America? By imposing a value-added tax, or VAT, on imports from the U.S., while rebating the VAT on exports to the USA. Works just like a tariff.

No, a VAT does not work like a tariff. In no manner at all does it do so in fact. As every economist keeps trying to point out. Within the EU all goods and services, no matter where they’re made, pay the exact same rate of VAT. Well, OK, ladies unmentionables pay a lower rate than motor cars, that’s true, but all unmentionables pay the same rate, all cars. There is no difference made between domestic and foreign production. It’s entirely unlike a tariff therefore, the crucial component of which is that distinction made between home and foreign production.

Stuff made in the EU and sold in the US pays no VAT. Stuff made in the US and sold in the US pays no VAT. Again, we’ve no distinction by source or origin, this is entirely and completely unlike a tariff.

March 15, 2018

QotD: The self-harming reality of tariffs

Filed under: Business, Economics, Quotations, USA — Tags: , , , — Nicholas @ 01:00

Unintended harm to American companies is a recurring problem with tariffs, even those meant to protect American jobs from competition that our government deems unfair. After Bush imposed steel tariffs, steel-consuming industries pointed out that they employed far more Americans than the steel industry itself, and argued that the net effect of the policy on jobs was negative.

Anti-dumping laws, which put tariffs on foreign imports that are supposedly being sold at too low a price, usually target intermediate goods and therefore make the downstream American producers that use them less competitive. Daniel Ikenson, a trade-policy analyst at the Cato Institute, notes that the government, perversely, is forbidden by law from considering the impact of tariffs on these producers before levying the tariffs.

Then there’s the question of costs. Gary Hufbauer and Sean Lowry, a senior fellow and research associate, respectively, at the Peterson Institute for International Economics, calculated [PDF] that Obama’s tariffs on Chinese tires cost American consumers at least $900,000 for every job they saved for one year. That’s before taking account of job losses caused by lower spending by consumers on other products and by retaliatory Chinese tariffs. This very high cost per job, they point out, is consistent with research on other instances of trade protection.

In an interview, Hufbauer notes that our efforts to protect industries from competition have typically not resulted in their revival and impose extremely high costs for any jobs they save. He cites the textile and maritime industries, both of which have been protected for decades, as examples of these disappointing results.

Ramesh Ponnuru, “The High Cost of U.S. Protectionism”, Bloomberg View, 2016-07-01.

March 6, 2018

Winning a Trade War Isn’t “Easy”… It’s Impossible!

Filed under: Business, Economics, Politics, USA — Tags: , , , — Nicholas @ 04:00

Foundation for Economic Education
Published on 5 Mar 2018

Trump wants to impose tariffs on steel and aluminum? Bad idea. We’ve been down this road before. Trade wars are short-sighted and economically destructive.

Ever wondered what caused the Great Depression? Check out this free eBook (available in mobi, epub, PDF, and audiobook formats!) by Larry Reed, “Great Myths of the Great Depression:”

https://fee.org/resources/great-myths-of-the-great-depression/

May 3, 2017

Softwood lumber, again

Filed under: Business, Cancon, Economics, USA — Tags: , , , , — Nicholas @ 03:00

Last week, Megan McArdle provided a quick look at the son of the bride of the revenge of the softwood lumber dispute monster:

According to American lumber producers, this is because of the nefarious subsidies the Canadian government has granted to its timber producers. In America, most softwood timbering takes place on private land, and the lumber is priced to recover the full cost of owning and maintaining many acres of trees. In Canada, forest resources tend to be owned by the government, which sets “stumpage fees” (the cost for cutting down a tree, which used to be assessed per stump and is now usually assessed by board feet or cubic meters [PDF]).

The American producers complain that these fees are set too low, providing an unfair subsidy for Canadian timber, especially because British Columbia (which has a lot of timberland) bans the export of Canadian logs, so that American lumber mills are unable to get in on this sweet, sweet deal.

For variety, American producers occasionally also complain that Canada is “dumping” (basically meaning that a country is selling goods in a foreign market below the price at home. Since this is — except in rare cases such as pharmaceuticals — a stupid business practice, accusations of dumping tend to exceed actual instances by a healthy margin.)

[…]

The history of litigation on this is long, rich and arcane. Since the 1980s, the U.S. and Canada have been locked in a cycle whereby the U.S. complains that Canadian softwood lumber is too darn cheap, complaints are filed with various entities, and eventually both sides decide it’s easier to come to some sort of settlement rather than subject everyone to another endless hearing on the minutiae of the lumber industry. Then an agreement expires, American lumber producers say “Now’s our chance, guys! We’re going over the top!” and the magical cycle of birth and death, conflict and resolution, begins once again in the forest lands.

When trade bodies get around to ruling, those rulings are often mixed: “Yeah, okay, maybe there’s some subsidy in there somewhere, but you Americans are wildly overreacting, so cool it with the huge tariffs.” Which was basically my take on the dispute in 2004, when I last covered it. Research does not reveal any good reason to revise that view, especially because Canadian stumpage has evolved somewhat over the years. British Columbia now uses auctions [PDF] in its coastal forest areas, which should tend to drive the price of stumpage there to par with the world market.

We should also note that any subsidy, however bad for American softwood lumber producers, is actually good for the vast majority of Americans who do not work in forestry. This morning, people were throwing wild numbers around about how much a tariff would increase the price of a house or a box spring. I’d take those numbers with a hefty dose of salt, but undoubtedly, they will drive the price of softwood lumber products up somewhat, which means less money in the pocket of you, The Modern American Consumer. So even if American timber producers were completely right and their tariff were warranted, the American consumer would suffer.

September 2, 2015

Tariffs and Protectionism

Filed under: Economics — Tags: , , , , — Nicholas @ 05:00

Published on 25 Feb 2015

We’ll look at the costs and consequences of tariffs, quotas, and protectionism. How do tariffs affect consumers? What about producers? Who wins and who loses? Find out with this video.
We’ll apply the fundamentals we learned in the supply, demand, and equilibrium section of this course to real-world examples — like that of protectionism in the U.S. sugar industry — to determine lost gains from trade or deadweight loss, the tariff equilibrium vs. the free trade equilibrium, and the value of wasted resources as a result of tariffs.

May 11, 2015

QotD: Tariffs are generally harmful, but persist anyway

Filed under: Economics, Politics, Quotations — Tags: , , , , — Nicholas @ 01:00

For another example, consider trade barriers such as tariffs. There are good economic arguments to show that we would be better off if we went to complete free trade. That seems puzzling — if we would be, why don’t we?

The answer is provided by public choice theory, the branch of economics that deals with the workings of the political market. A tariff makes the inhabitants of the country that imposes it worse off but the politicians who pass the tariff better off, since it benefits a concentrated interest group at the cost of dispersed interest groups. More concentrated interest groups are better able to pay politicians to do things for them. Trade policy is optimized, but for the wrong objective.

David D. Friedman, “Why Improving Things Is Hard”, Ideas, 2014-07-08.

February 11, 2013

Senate report calls for tariff cuts

Filed under: Business, Cancon, Economics, Government, USA — Tags: , , , , , , — Nicholas @ 12:57

In the Financial Post, Terence Corcoran looks at the good and not-so-good aspects of a recent Senate report on the reasons Canadians pay so much more for goods than Americans (even when the goods are identical and the currencies are trading at par):

Retail prices in Canada, seemingly across the board, are higher. Even with the Canadian dollar at par, the price of everything from running shoes to televisions and Chevy Camaros to books is said to be above U.S prices. One bank report once put the Canada-U.S. price gap at 20%.

Somebody’s gotta do something, everybody agrees. Enter the Senate committee with one of the most hard-nosed, market-driven overviews of how and why Canadians pay more for goods at retail. The report dodges and fudges some key issues, especially farm product supply management, which was seen by the committee and the retail industry as too politically hot to handle.

[. . .]

Even in this, however, the committee pulls its first punch. The recommendation to “review” such tariffs — watery phrasing in itself — also suggests “keeping in mind the impact on domestic manufacturing.” Sorry, folks, but you can’t have it both ways. Tariffs are protectionist devices for manufacturers that consumers pay for. If you want to reduce the price to consumers, the $3.9-billion in protection for manufacturers has to go. End of discussion.

What makes The Canada-USA Price Gap even more valuable is its compact insights into the many causes of higher retail prices in Canada. The economy is a complicated and often unfathomable series of market and price relationships beyond the power and even understanding of policy makers. The report recognizes that fact time and again.

September 18, 2009

US tariff on Chinese tires “a colossal blunder”

Filed under: China, Economics, USA — Tags: , , — Nicholas @ 09:14

I don’t read The Economist regularly these days, having given up my 20-year subscription about five years back. Their steady drift away from free markets towards statist models made the publication less and less interesting (and much more live most other financial publications). This article, however, at least covers the situation in an even-handed way:

You can be fairly sure that when a government slips an announcement out at nine o’clock on a Friday night, it is not proud of what it is doing. That is one of the only things that makes sense about Barack Obama’s decision to break a commitment he, along with other G20 leaders, reaffirmed last April: to avoid protectionist measures at a time of great economic peril. In every other way the president’s decision to slap a 35% tariff on imported Chinese tyres looks like a colossal blunder, confirming his critics’ worst fears about the president’s inability to stand up to his party’s special interests and stick to the centre ground he promised to occupy in office.

This newspaper endorsed Mr Obama at last year’s election in part because he had surrounded himself with enough intelligent centrists. We also said that the eventual success of his presidency would be based on two things: resuscitating the world economy; and bringing the new emerging powers into the Western order. He has now hurt both objectives.

Several sources mentioned that yesterday’s announcement about cancelling the ABM systems that were to be installed in Poland and the Czech Republic was an attempt to cozy up to Russia. This move can only be interpreted as an attempt to look tough against the Chinese — which would just be dumb — or (even more disturbingly) solid proof that Barack Obama doesn’t have a clue on international trade.

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