Rising protectionism is a legitimate concern. However, new pledges to avoid protectionist measures are unnecessary. Instead, G-20 leaders should agree to have a crash course on the global economy. They should lock themselves in a Pittsburgh conference room and learn, once and for all, that trade cannot be characterized as an "us" versus "them" proposition or as "our" producers against "their" producers.

In our globalized economy, the definition of a "domestic" company is elusive. The factory floor has broken through its walls and now spans borders and oceans so that citizens in Asia and North America, for example, typically collaborate, through global production and supply chains, from product conception to consumption. Under this set-up, trade barriers represent huge costs to business, workers, and consumers, primarily in the countries implementing them.

The largest American steel company, Arcelor-Mittal, is majority Indian-owned with headquarters in Luxembourg. The largest German steel company, Thyssen-Krupp, is completing a $3.7 billion green field investment in Alabama to produce carbon and stainless steel. Approximately 50 percent of the value of U.S. imports from China is actually Chinese value-added. The rest comprises materials and labor from other countries.

These huge increases in cross-border investment and the proliferation of global supply chains should be enough to convince policymakers that protectionism is, as they say, so last century.

President Obama's calculated decision to impose the duty on Chinese tires might score him points with Big Labor, but it no doubt will carry significant costs for U.S. interests. The consequences for other links in the domestic tire supply chain—distributors, wholesalers, retailers, industrial users like automakers and consumers—could be severe, as the absence of Chinese-made tires raises costs and prices, and curtails demand in the United States for replacement tires.

And at a broader and more permanent level, all U.S. credibility on matters of international trade policy is now spent.

Back in April, President Obama pledged before other world leaders at the G-20 summit in London that his government would avoid new protectionist measures, as the global economy was struggling to emerge from recession. Clearly, the tire decision abrogates that pledge and gives cover to other governments that have been restrained, thus far, from protecting their own domestic industries for political purposes.

And though the Chinese are not technically permitted to retaliate for Obama's tire tariff, respect for international trade rules seems to be receding. U.S. exporters across the agricultural and manufacturing spectrum are worried that they will be targeted—a concern that is validated by China's announcement this weekend of investigations into U.S. auto and poultry exports.

Imposing the tire tariff might appear to benefit the president politically, but that personal benefit will be fleeting and will come at an enormous cost to U.S. interests. In that regard, the tire decision will be considered a watershed in international trade policy.

Also, if I'm on the board of directors at Ford, now I'm thinking that the rest of the auto industry is surviving more or less on the whim of the U.S. government. So even if my balance sheet is healthy enough to go it alone, why am I not going to try to get whatever I can out of Washington? There's the specter that the taxpayer is now going to be on the hook for yet another $30-$40 billion once Ford's leadership decides, "Hey, this bankruptcy deal really isn't so bad."