The looming U.S./China trade war

03/11/2009 12:00 - 521 Views

It all started when President Obama, under pressure from U.S. unions, slapped a 35% tariff on tire imports from China. This move angered Beijing to no end, and to the point that China is challenging the action with the World Trade Organization.

China, in retaliation, has said that it would launch an "antidumping" policy against U.S. car exports to China. U.S. car makers export only about 9,000 vehicles to China at present. However, China is now the leading auto maker in the world, and barring U.S. imports would hamper the U.S. auto export market.

Also, we do not know which way the Europeans will swing in this move. They too, export their vehicles to China.

Meanwhile, in Congress, sentiment is growing to pass an antidumping bill that would slap antidumping or countervailing duties on goods from countries that "undervalue" their currency. As you probably already know, China has been accused of undervaluing its currency to enhance its export prices.

This is the first volley. Whether this is the beginning of a protectionist trade war between the U.S. and China remains to be seen.

Do you believe that this is the right policy?

Posted Nov 1st 2009 11:40AM by Connie MadonConnie Madon RSS Feed

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