Economists, even those staunchly in the Obama camp, are up in arms about his decision to levy tariffs on tires from China. Here is the most simplistic economists view on these tariffs (assuming partial equilibrium and that the US is a "small open economy"). This is certainly the easiest way to indicate the negative impact of a tire tariff, but its not the full story.
Doug Irvin, an eminent economic historian, reminds us that no matter how enlightened, independent, or ideological a president may have been, "regardless of party, every president, at some point, and often for political reasons, has imposed restrictions on imports."
Chapter 7 in International Economics clearly outlines that once politicians are maximizing not only economic welfare, but also political political objectives, it is actually the absence of tariffs that should surprise us.
What does endogenous protection imply about President Obama's objective function? Who are the key pressure groups in the US?
