Tag Archives: Trade War

Obama’s Trade War: When the Economy Breaks in Earnest It May be Over Something as Stupid as Tires

Barak Obama is playing with fire at the behest of his Union masters.

In a blatant act of protectionism the Obama Administration is imposing additional tariffs on Chinese Tires, and risking a trade war with the Chinese. Once the tariffs and sanctions start to be imposed they are matched by counter tariffs and sanctions by the aggrieved government. At best relations with the largest buyer of US debt will sour relations a bit while at worst a general trade war can tear the economy apart as protection of our 7000 factory workers leads to losing the Chinese market in a mindless, and ill advised, game of tit for tat. From some of the most humble beginnings, like this carping over Chinese tires for example, a super destructive trade war can develop that has the power to topple a superpower from its perch.

No one really wins a trade war: it’s a bloody war of economic attrition, much like World War I was an ongoing mindless slaughter of troops to advance the front line a few hundred yards, became the poster child for wars of attrition. The combatants dig in and the mindless slaughter ensues until it becomes unsustainable. Even the eventual winner, is a loser, because of the mindless and senseless waste of recourses.

In a global economy, such as ours, with an enmeshed and ailing financial system, the law of unintended consequences could rear its ugly head, repeatedly, as a twenty first century trade war between the US and China causes untold damage on the planetary economy.

When the last economic straw comes, that crushes the American Economy for generations, it could well come from something as innocuous as this foolhardy tempest with the Chinese. Mr. Obama is, by his words a capitalist, but by his actions, a committed Marxist and a stealthy Black Nationalist, but we need a real president to hold the line on trade wars: not a “community organizer” whose been bought and paid for by big labor.

Consider the following article from the Financial Times: http://www.ft.com/cms/s/0/f67c6fe6-a024-11de-b9ef-00144feabdc0.html

US tyre duties spark clash By Geoff Dyer in Shanghai and Tom Braithwaite in Washington Published: September 13 2009 06:53 | Last updated: September 13 2009 19:23

A full-blown trade row erupted on Sunday night between the US and China after Beijing accused Washington of “rampant protectionism” for imposing heavy duties on imported Chinese tyres and threatened action against imports of US poultry and vehicles.

Trade relations between two of the world’s biggest economies deteriorated after Barack Obama, US president, signed an order late on Friday to impose a new duty of 35 per cent on Chinese tyre imports on top of an existing 4 per cent tariff.

In his first big test on world trade since taking office in January, Mr Obama sided with America’s trade unions, which have complained that a “surge” in imports of Chinese-made tyres had caused 7,000 job losses among US factory workers.

Chen Deming, China’s minister of commerce, condemned the decision, saying that it “sends the wrong signal to the world” at a time when Washington and Beijing should be co-operating to deal with the worst economic and financial crisis in decades.

“This is a grave act of trade protectionism,” Mr Chen said in a statement. “Not only does it violate WTO rules, it contravenes commitments the United States government made at the [April] G20 financial summit.”

China said it would now investigate imports of US poultry and vehicles, responding to complaints from domestic companies.

The US warned Beijing against taking retaliatory action. “Retaliation would be inappropriate, as the United States acted entirely within the bounds of trade laws and within the safeguard provision that China itself agreed to upon accession to the World Trade Organisation,” said an official from the Office of the United States Trade Representative.

The official said that enforcing trade agreements and laws was “critical” to maintaining free markets. Another official said the US had “negotiated to the end with the Chinese to come up with something we could all agree to”.

US officials said they were scrutinising the export of poultry and vehicles, but said any action in retaliation by China could result in a complaint by the US to the WTO.

The dispute comes less than a fortnight before Mr Obama is due to host world leaders at a summit of G20 nations in Pittsburgh and ahead of his planned visit to China in November.

The decision to impose extra tyre tariffs followed a petition by the United Steelworkers union, which represents workers at many US tyre factories. Official figures show an increase in imports from 14.6m in 2004 to 46m in 2008.

Eswar Prasad, professor of trade economics at Cornell University, warned that the disagreement could escalate.

“These protectionist measures, some of which amount to domestic political posturing rather than substantive restraints on trade, could easily ratchet up into a full-blown trade war and inflict serious economic damage on both countries,” he said.

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