Filed in archive Policy by Greg Cruey on November 11, 2009

Flooding the US Market? There's a tariff for that...

© kludgebox

Remember the Obama Administration's new tariff on tires made in China? When it was announced back in September, analysts said it was going to be the start of a new trade war. In case no one noticed, that hasn't happened...

China appears to have little inclination to escalate the dispute. Chinese officials spoke sharply against the safeguard decision when it was announced, calling it "a grave act of trade protectionism" that violates commitments the U.S. made against such moves earlier this year. But their direct response was to simply request talks on the matter--a move that hardly suggests a desire for rapid and substantive retaliation. Beijing did announce the initiation of trade remedy cases against U.S. chicken parts and warned of similar action on auto parts. However, observers say the selection of these goods appears calculated more to send a warning to Washington than to inflict immediate pain. As much as the U.S. relies on China economically and financially, Beijing is no less dependent on America as the primary market for its ever-increasing production. So, like the U.S., China has little motivation for a trade war.

Author Tom Travis provides a good overview of the trade war that wasn't.

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Permalink: The Trade War That Wasn't

Tags: tires, china, tariff china trade hedge+fund china+venture private+equity

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Rating: 8.00 out of 4 vote(s) cast.

Response from: China Law Firm (11/12/09 10:45am)

Actually, it is kind of happening. I agree, it has not happened yet, but I also see both sides really stepping up the rhetoric and I fear that unless something changes fast (i.e. during Obama's China visit), a trade war will break out. I just think it is too soon for complacency.

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