The Obama Administration has set world trade on an ominous (read protectionist) trend these last few months. The latest is a poke in China’s eye; though, admittedly, China does need to blink, tear up a bit, and realize the days of its old trading ways are numbered. The Economist Magazine in its latest leader and supporting article came out dead set against President Obama’s approval of the 35% tariff on tires exported from China.

IN RAW economic terms Barack Obama’s imposition of tariffs on Chinese tyres hardly registers. The number of jobs affected is barely a rounding error in measurements of the mighty American workforce. The cost to consumers is also slight. But in geopolitical terms, it is a whopper. Mr Obama’s most overtly protectionist decision so far has triggered a predictably angry reaction from China, which threatened to retaliate against American chickens and car parts and to haul America before the World Trade Organisation. The Global Times, a newspaper that often reflects the views of hardline nationalists in China, ran a front-page headline saying “America has erred before the world”.

Problem is of late, China if anything has bolstered its subsidies to its export sector without liberalizing the currency controls that created the pile of cash Paul Krugman calls China’s “Dollar Trap”. The New York Times writes that before Obama’s prod:

For the most part, Chinese officials have grumbled but done little, preferring to preserve a trade relationship in which the United States buys $4.46 worth of Chinese goods for every $1 worth of American goods sold to China.

I tend to agree though with Robert Samuelson’s thinking in The Washington Post in his article, aptly titled, “Obama’s Tire Tariff: Bad Policy, Right Message” :

But tolerating China’s predatory trade practices is also dangerous. China’s cheap exports reflect more than low wages. Government actively promotes and subsidizes exports, especially through a deliberately undervalued currency. The undervaluation lowers the prices of Chinese goods. Economist Nicholas Lardy of the Peterson Institute figures the present price advantage at 15 to 20 percent. It might be more. Economist Eswar Prasad of Cornell University argues that cheap credit and subsidized land and energy enhance the price competitiveness of Chinese exports…

Similarly, the undervalued currency deters imports by making them more expensive, and China favors local production by other policies too. European companies have complained, for example, that China discriminates against them in its market for solar and wind power.

Question is: is there ever a “good” time to poke a dragon?