Oh noes! Obama levied a tariff on tires. ‘Whatchyou gonna do now!? Here’s some coverage via Naked Capitalism (referencing this NYT article):

And it is hard to know what the Chinese will do. On the one hand, China is clearly wedded to mercantilist trade policies and it is hard to see them making serious changes when their economy is flagging. So they could see this as a frontal challenge at a time not of their choosing. The rhetoric from the Chinese, at least as reported in China Daily, says the Chinese regard this move as an affront, but the Chinese so frequently go into high dudgeon mode, it is hard to tell when they are merely posturing and when they are quite serious: …

This Sina.com article doesn’t seem particularly bellicose. It notes that “Obama is seeking support for health care reform, especially among Blue Collar workers” and “during the election labor unions were very strong supporters of Obama.”

There will be an official response, but it will be very metered. China still relies too much on exports to risk further retaliatory actions from the U.S. They will however need to appear to their own ‘constituents’ as being tough internationally, especially around the 60th anniversary. From a U.S. perspective, the tariff might hurt just as much it would help – more expensive tires for U.S. automakers; and whatever retaliatory measure the Chinese take certainly won’t protect any domestic jobs. It does help give Obama credibility as a change agent, or is it too insignificant an action in light of stalling health reform / minimal new financial regulation?

Generally: were tariffs a more effective lever for pushing for changes in the Chinese currency regime the narrative might be different – but that hasn’t been a big issue in years. There are probably more effective means, some of which are probably being pursued.

Update: Dingel notes the following, by Chad Brown of the FT:

[A] little-known loophole in the rules governing China’s 2001 WTO accession makes it easy for a global protectionist response to spread faster and further than that which took hold in 2002. Nowadays, once any one country imposes a China safeguard on imports, all other WTO members can immediately follow suit, without investigating whether their own industries have been injured.