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U.S. Trade Spat with China Escalates, But is Unlikely to Cause a Significant Rift

Posted on September 22nd, 2009 in Bloomberg, China, ITC, NUE, NY Times, Nucor, Tariff, Tires, US Steel, USA, WTO, X , , , , , , , , , , ,

Shortly after U.S. President Barack Obama announced hefty import duties on Chinese-made tires, China’s Ministry of Commerce over the weekend said it would explore possible sanctions against U.S. automobile and chicken imports.

The dispute has caused some concern over an escalation in protectionist measures between the two nations, but few analysts believe the dispute will spiral out of control and threaten a global recovery.

President Obama on Friday signed an order that imposes a 35% tariff on tires imported from China on top of the existing 4% duty. The order came mainly at the behest of the United Steelworkers union, which says 5,000 union jobs have been lost since 2004 because low-cost Chinese tires flooding the market. From 2004 to 2008, the number of tire imports from China has tripled.

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Here’s Why the U.S.-China Tire Tiff Lead to Great Depression II

Posted on September 22nd, 2009 in China, Colombia, Duty, G20, ITC, International Trade Commission, NAFTA, Obama, Tires, Trade, USA, WTO, World Trade Organization , , , , , , , , , , , ,

When U.S. President Barack Obama late Friday (Sept. 11) signed an order that imposed an additional duty of 35% on tires imported from China, it set up the potential for an old-fashioned trade war.

Currently, global trade is down only 20%. During normal times, worldwide commerce would recover on its own. But as most investors understand all too well, these aren’t normal times.

Global trade fell by 35% after last September’s financial crash. And it plunged 65% between 1929 and 1932 as a result of the Great Depression. With the worldwide economy already in a weakened state, a bare-fisted trade war between the world’s two most important trading partners – the United States and China – would be devastating.

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