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A full-blown trade row erupted 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.
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.
Interestingly the Obama administration slapped tarrifs on China tire imports to seemingly protect American jobs. Reading different commentaries I have not found anybody who thought it was a good move and there are likely will hurt U.S. consumers:
20-30% increase tire prices for U.S. consumers within the next 60 days. Some are calling it very stupid and very bad for U.S. Consumers.
China will hit back - they have taken a even bigger unemployment hit from the down economy and there will be political pressure.
Morgan Stanley economist didn't think it was warranted and will threaten the relationship between the U.S. and China.
Timing is considered inappropriate because globally things are starting to turn a corner and this won't help due to increase in tensions.
Global trade is not expected to recover anytime soon and protectionism can only make things worse
-“In 1930, the Republican controlled House of Rep, in an effort to alleviate the effects of the… Anyone? Anyone?… the Great Depression, passed the…Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act which, anyone? anyone? Raised or lowered?… Raised tariffs, in an effort to collect more revenue for the federal gov’t. Did it work? Anyone? Anyone know the effects? It did not work, and the US sank deeper into the Great Depression.”
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