This is the Cato Daily Podcast for Wednesday, September 16, 2009. I'm Caleb Brown.

President Obama may have failed his first major test on trade opting to slap a 35% tariff on Chinese

tires.

He may also have opened the floodgates for other industries to request protection from the

White House.

According to Dan Eichenson, Associate Director of the Cato Institute's Center for Trade Policy Studies,

the only winner here is the short-run political fortunes of the president.

Is it possible that the Obama administration is actually correct that this is a small

thing, the US relationship with China economically is huge and this really isn't that big a deal.

No that's incorrect. We've got a situation where domestic industry and unions have been waiting to test President Obama to see whether or not he would actually impose duties under this law.

This law was passed in 2001 as part of China's accession to the WTO.

Under the Bush administration, there were six cases brought,

and the U.S. International Trade Commission and four of those cases recommended to President Bush

to impose trade restrictions and in all four of those cases he declined to do so because it was

found to not be in the he found it to not be in the economic

interest in the United States. So the president has discretion in these cases.

President Obama in his first opportunity to exercise discretion decided to grant duties, prohibitive duties

at that, 35%, and that is going to have a ripple effect.

It's going to encourage other industries to bring cases now. They're going to say,

hey, we've got a president here who's on board with protection. So it's not just the tire industry that's going to be

adversely affected here. It is other industries that will come to the fore and try to present

cases for protection and it's quite likely that we will see some form of

...