Labor Unions Demand Escalation Of Trade War With China, Ask Obama To Restrict Chinese Auto Part Imports

Tyler Durden's picture




 

Because the last time the administration got involved in the car space the results were so positive (for the unions if not so much for creditors), it appears we may be approaching another episode where central planning will make the decisions in the US auto space. Only this time instead of creditors, the impaired party will be China. Reuters reports: "Midwestern U.S. lawmakers and union groups on Tuesday urged President Barack Obama to restrict imports of auto parts from China that they said benefited from massive illegal subsidies and threatened hundreds of thousands of American jobs. "We need to stand up to the bully on the block," U.S. Senator Debbie Stabenow, a Michigan Democrat, said, referring to Beijing. "The bully on the block continues to take our lunch money and we need to stop that," she said." Odd - China was not complaining when the Obama administration was providing massive subsidies (whether or not illegal remains to be seen  - surely Holder is all over it) to the solar and other "green" industries. In other words, just like Solyndra and Ener1, who are merely the first of many artificially subsidized entities, provided such great if highly transitory results for US employment, let's recreate the experiment at the wholesale level, by implicit subsidies and while also angering America's biggest creditor. Something tells us this proposal has a definite probability of passing. In the meantime, central planning for everyone.

More on this brilliant foray into trade wars:

The push for the administration to bring a possible case at the World Trade Organization or begin a U.S. Commerce Department investigation that could lead to duties on Chinese-made auto parts came one week after Obama said he was creating a new Trade Enforcement Unit to crack down on unfair foreign trade practices in China and other countries around the world.

 

It could create further strains in the U.S.-China relationship as Obama is preparing to host Chinese Vice President Xi Jinping, who is expected to be China's next leader, a the White House on Feb. 14.

 

"We must be aggressive on trade enforcement - especially as China ramps up subsidies in strategic industries like auto parts, said Senator Sherrod Brown, an Ohio Democrat.

 

"Today, we're providing the president with his first opportunity to deliver on the promise to guarantee a level playing field," said Scott Paul, president of the American Alliance for Manufacturing, whose members include the United Steelworkers union and steel companies.

 

The groups released studies prepared by the labor-backed Economic Policy Institute and the Stewart and Stewart law firm that cataloged Chinese government subsidies and practices that they said violated WTO rules and threatened jobs at many small- and medium-sized U.S. auto parts manufacturers.

 

"If these policies are not stopped, by the end of the decade China could seize 50 percent or more of our auto parts market, costing hundreds of thousands of American jobs," said Terrence Stewart, Stewart and Stewart's managing partner, which specializes in cases against allegedly unfair imports.

 

Last year, the United States ran a deficit of nearly $10 billion in auto parts trade with China.

Here's a thought: perhaps the US would run a surplus if it provided quality pieces at affordable prices that could compete with China-made products? As for the idiocty of the remainder, we will just watch it crash and burn as it is enacted, and has dire consequences on every other part of the global economy, as these same trade unions finally realize that Chimerica are actually joined at the hip, and that what is worse for China is n-fold worse for the US.

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Tue, 01/31/2012 - 15:53 | 2113747 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Good.  Fuck China.

Tue, 01/31/2012 - 15:55 | 2113753 GeneMarchbanks
GeneMarchbanks's picture

Phuk ewe PRC.

Tue, 01/31/2012 - 15:58 | 2113764 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We should have done this years ago instead of bailing out the auto industry.  It would have made the industry more competetive and at the same time would have kept the competition inside America.

Tue, 01/31/2012 - 16:06 | 2113809 nope-1004
nope-1004's picture

2 problems here:

1)  Junk made in China is just that:  JUNK.

2)  Unions increase prices to the point of no return, as union workers will not accept benefits, etc... being removed.

 

Tue, 01/31/2012 - 16:47 | 2114055 JW n FL
Tue, 01/31/2012 - 18:24 | 2114503 DoChenRollingBearing
DoChenRollingBearing's picture

@ nope-1004

+ 1

Chinese bearings are (usually) junk, but they are cheap.

Your point No. 2 is correct.  And Timken (the US bearing manufacturer) is among the worst crybabies re imports from Japan, China abd even Germany, France and the UK.

Timken has low market share in Peru because their bearings are too expensive.  NO WAY their (automotive bearings anyway) are 25% better than Japanese as their higher prices would imply.

Tue, 01/31/2012 - 16:06 | 2113813 GeneMarchbanks
GeneMarchbanks's picture

In all seriousness though, it's too late for anything but escalation. What you should have done, if we're going to be dealing in hypotheticals, is not have partnered with the Chinese in the first place. Too late, now you have to export your inflation to them before they can import their [wage] deflation to you. Good luck with all that.

Tue, 01/31/2012 - 16:08 | 2113825 kito
kito's picture

actually lennon, we are just pissing off the chinese, who have a potential market of 1.3 billion plus people. as it is, american companies have a hard time getting their foot through the great wall, how do you think they will react with more free trade manipulation on our part???

china is working feverishly towards an internal consumption market. there will come a day when they wont need anything we provide. truth be told, they need africa and south america for raw commodities alot more than they need the u.s.

Tue, 01/31/2012 - 16:24 | 2113929 xela2200
xela2200's picture

As it is China is the US 3rd export market.

Tue, 01/31/2012 - 16:16 | 2113872 VanillAnalyst
VanillAnalyst's picture

Trade war?.......... like with money?........... Well..... that doesn't sound fun at all....... we wouldn't even have an excuse to build more tanks.

Let's not half ass this. Let's have an old fashioned war.

Tue, 01/31/2012 - 23:21 | 2115390 A Nanny Moose
A Nanny Moose's picture

Yep. All that excess capacity needs to be scrubbed, just like it was in WWII.

Wed, 02/01/2012 - 07:59 | 2115808 Mareka
Mareka's picture

Good, That way GM, still in business because my government bailed it out with my money, can still charge me $180 for a part that wouldn't have failed if it had been designed right in the first place.  Heads they win, tails I lose.

Tue, 01/31/2012 - 16:07 | 2113799 TruthInSunshine
TruthInSunshine's picture

The Unions won't get anything but an election year token stroke & tug.

Did they really believe that either of the two 'parties' in the U.S. were going to interfere with multinational corporate investment in the trillions building plants and facilities in China, so that they could use China as the factory for lower-cost-of-production cars, car parts, electronics and every other consumable good, now and for decades to come?

Do the brilliant leaders of the unions, who represent their union due-paying members best interests (/sarc), really think those massive GM andFord (and every other manufacturer and supplier in the world). etc. factories in multiple Chinese manufacturing zones are going to be shut down due to their wails and moans?

Aside from that, anyone having even a basic understanding as to how China has made it far easier to produce goods there than in the U.S., with giant zones, with every faciity, machine, engineering resource and any other tool or problem 'solver' on hand 24/7 (essentially being subsidized by the Chinese Government), understands why this continued investment won't be reversed absent some sort of major global event that turns into an actual war.

It was Bill Clinton that gave China Most Favored Nation Trade Status, after George W.'s father set the ball up on the tee for him.

What's a union member to do?

 

(I am not arguing for or against trade sanctions on China for purposes of this response. I'm just relaying the realities to those who may have missed economic and global trade history since the 1980s.)

Tue, 01/31/2012 - 16:13 | 2113856 GeneMarchbanks
GeneMarchbanks's picture

Truth is... you can't fight and win this war while stirring another actual one again. America is out of sudden moves, can't afford them anymore. You need a nation of tacticians not war-brutes or you'll lose big time. Start here:

http://www.amazon.com/Art-War-Sun-Tzu/dp/0195014766/ref=sr_1_2?ie=UTF8&q...

 

Tue, 01/31/2012 - 16:14 | 2113862 iDealMeat
iDealMeat's picture

....absent some sort of major global event that turns into an actual war.

Little Clean water...  and no Oil..

China's issues come to a head sooner then later.

 

 

Tue, 01/31/2012 - 17:24 | 2114257 Stuck on Zero
Stuck on Zero's picture

Export the trade unions to China.  That will cook their goose.

Tue, 01/31/2012 - 16:04 | 2113806 Silver Bug
Silver Bug's picture

Trade wars always end in disaster.

 

http://goldisking.blogspot.com/

Tue, 01/31/2012 - 16:10 | 2113841 Puck Xue
Puck Xue's picture

China is currently 79 on the list of country's about to be phuked.

Tue, 01/31/2012 - 15:59 | 2113775 DeltaCharlie
DeltaCharlie's picture

No, America is fucking you, stupid!

Tue, 01/31/2012 - 16:07 | 2113821 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think you are mixing up the US Empire, which is run by globalist bankers, with America.  America only exists as an idea now.

And all the Ad Hom is getting ridiculous.  At least have an arguement to go along with the name calling.  If you need a reference to see how it is done, find Trav, he will learn you.

Tue, 01/31/2012 - 17:54 | 2114366 spartan117
spartan117's picture

Bullshit.

Most of America would rather vote for Romney/Obama than Ron Paul.  As far as I'm concerned, they can be lumped in with the bankers.  If they're going to ignorant, they deserve the coming fallout. 

Wed, 02/01/2012 - 03:20 | 2115674 AnAnonymous
AnAnonymous's picture

I think you are mixing up the US Empire, which is run by globalist bankers, with America. America only exists as an idea now.

//////////////////////////////////

'America' is just a fable.

'America' is just the tale.

US of A has always been driven by US citizenism.

The ways of US citizens have not changed since 1776,July,4th.

The US of A is a product of globalism.

Tue, 01/31/2012 - 16:09 | 2113835 Eally Ucked
Eally Ucked's picture

What did you want to say except you wanted to be first to post?

Tue, 01/31/2012 - 16:28 | 2113950 LongSoupLine
LongSoupLine's picture

 

 

oh boy...I can see it already.  Prep for the newly priced (at cost) $156,000 Ford Escort.

Tue, 01/31/2012 - 20:04 | 2114810 UP Forester
UP Forester's picture

I'll wait for the more affordably priced Ford Fiesta at $100,000.

Tue, 01/31/2012 - 16:39 | 2114026 midtowng
midtowng's picture

Tariffs are NOT central planning. Unless, of course, you the economy had many times more central planning the late 19th Century than it does now.

And I would be curious how anyone thinks that someone could make it on $2 a day here in the States.

Tue, 01/31/2012 - 16:07 | 2113750 GeneMarchbanks
GeneMarchbanks's picture

BDIY says China is ahead of the game.

Again I might add...

Tue, 01/31/2012 - 15:55 | 2113756 Poetic injustice
Poetic injustice's picture

Yes, do it. The faster trade war starts, the better.
Of course, making better quality cars than Chinese would also work but that is impossible alternative.

Tue, 01/31/2012 - 16:12 | 2113852 weinerdog43
weinerdog43's picture

Sorry, but I happen to think that we Americans make quality products if given the chance.  It sure would be nice to have a manufacturing base again.

Tue, 01/31/2012 - 16:24 | 2113924 Poetic injustice
Poetic injustice's picture

They painful irony is that in current situation it is not possible.
Government subsidies = no incentive to work better, and no subsidies = costs more than in China.

Tue, 01/31/2012 - 16:33 | 2113975 pods
pods's picture

Agree.  Most of the "auto parts" that are the low end Chinese made stuff is so bad I would not put them on my enemies car.  

pods

Tue, 01/31/2012 - 17:29 | 2114290 carguym14
carguym14's picture

Might want to look a little closer-most of the parts you buy from the dealer (and what is installed on the car at the factory) are Chinese.

2010 chevy car tail light?Made in China.99 chevy pick up oil cooler lines?Made in China.et cetera et cetera............

I run a shop,and it would amaze you the very few parts made here (I buy as much as possible made here,but sometimes you have no choice).I refuse to install Chinese steering components-I will sell US made at cost instead.

It's too late now anyway-we should have been preventing this 20+ years ago.If only someone <cough>Ross Perot <cough> had debated the outcome wth Al Gore many years ago..........

Tue, 01/31/2012 - 18:03 | 2114418 pods
pods's picture

Oh I agree.  Source my parts on the internet. Not many made in USA.  Some decent stuff I have found from Mexico.  Actually posted down below about $8 Chinese tie-rod ends I saw.  Did the front end on the minivan, and forgot to order the sway bar link kit online.  Stopped by Advance and they only had one type. Cheap ass boots, impossible to torque without twisting.  Nightmare.  Guess they just cannot make margins with higher end stuff?

pods

Tue, 01/31/2012 - 16:35 | 2114001 Dr. Engali
Dr. Engali's picture

Are you kidding me? Domestic automobiles are and have been pieces of garbage. I bought my last domestic 10 years ago and never again will I buy another one.

Tue, 01/31/2012 - 16:39 | 2114019 dickizinya
dickizinya's picture

except for the high corporate taxes, onerous environmental laws, union featherbedding, and O YEAH--try building a factory without every local politician tossing up legal obstacles until you make payoffs that push your break even to the 23rd century.

Doomed.

Tue, 01/31/2012 - 15:56 | 2113758 Everybodys All ...
Everybodys All American's picture

One small correction ... the Federal Reserve is America's biggest creditor.

Tue, 01/31/2012 - 16:06 | 2113763 Kaiser Sousa
Kaiser Sousa's picture

yeah, yeah, its China's fault...

its always someone else's fault when it comes to the great basket case of the "free world"...

bitch ass america...just can't stand being second best...

or, should i say third world...

Silver and Gold suckers..............

Tue, 01/31/2012 - 15:58 | 2113766 lolmao500
lolmao500's picture

http://www.cnbc.com/id/46202656#ixzz1l448qC8o

S&P Warns of Cuts; Another US Downgrade Coming?

Concerns over the size of United States debt reared their head once again as ratings agency Standard & Poor’s warned that health care costs for a number of highly-rated Group of 20 countries, including the U.S., could hurt growth prospects and harm their sovereign creditworthiness from the middle of this decade.

"Governments' fiscal burdens will increase significantly over the coming decade, with the highest deterioration in public finances likely to occur in Europe and other advanced G-20 economies, such as Japan and the U.S.," S&P said in a statement on Tuesday.

 

Tue, 01/31/2012 - 15:59 | 2113768 I am more equal...
I am more equal than others's picture

Can you say war?

"War is good for nothing" except for kick starting your failed consumer economy.

Tue, 01/31/2012 - 16:20 | 2113839 fuu
fuu's picture

At this point it will need to be a serious kick ass war, the effects of the last 12 years of war are wearing off.

Tue, 01/31/2012 - 17:32 | 2114301 carguym14
carguym14's picture

Like WW2 where everyone elses manufacturing was bombed into rubble?

Tue, 01/31/2012 - 17:34 | 2114307 fuu
fuu's picture

America would need to put the unemployed 10% to work making bombs to get all that done.

Tue, 01/31/2012 - 15:59 | 2113772 Trajan
Trajan's picture

StupiD, its not just for breakfast anymore!

Tue, 01/31/2012 - 16:00 | 2113776 Bud Denton
Bud Denton's picture

Get them Chinese!  How dare they interfere with the lifestyles of Obama voters!  If the American taxpayers are all tapped out and can't afford to subsidize union jobs directly, why, then, they'll just have to support them indirectly, through higher prices.

 

There.  Now that that's taken care of, lets go print some money and distribute it to the proles so they'll be able to afford the crappy "output" of the Obama voters.

 

GM should name their next car "The Excretion."

Tue, 01/31/2012 - 16:00 | 2113779 Lucius Corneliu...
Lucius Cornelius Sulla's picture

So we go to protect our manufacturers through trade policy like the Chinese have been doing for decades and somebody is crying foul?  I say repeal the 16th Ammendment and raise money through tariffs!

Tue, 01/31/2012 - 16:00 | 2113781 iamtheeggman wh...
iamtheeggman whooooooooooooo's picture

While (taxpayer owned) GM just inked a deal with South Korea's Hyundai to supply $1 billion in parts...

http://www.reuters.com/article/2012/01/31/us-skoreas-hyundai-idUSTRE80U0...

Sun, 02/05/2012 - 09:52 | 2128306 RSloane
RSloane's picture

Yezz. Its jerbs jerbs jerbs, just not in the US.

Tue, 01/31/2012 - 16:01 | 2113783 Contra_Man
Contra_Man's picture

Maybe the Chinese central planners have alternatively decided to not import any NA automobiles for they have sided with German automobile manufacturers instead (reoccurring trading theme) ... and all this propaganda is just a face saving effort on behalf of Government Motors/NA manufacturers who have also now stuffed every possible channel.

Tue, 01/31/2012 - 16:01 | 2113785 dick cheneys ghost
dick cheneys ghost's picture

Pass the Sweet and Sour Shrimp........

Tue, 01/31/2012 - 16:02 | 2113787 kralizec
kralizec's picture

Unionistas and scared scatless Dem's to Obama - Dance, bitch!  LOL!

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