Sunday, September 13, 2009

Will China Retaliate?

The dark ages of trade wars may be upon us, again.

With China furious at President Obama's tariff on tires coming into the United States from China, will China retaliate?

Chen Deming, China’s minister of commerce, correctly 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.

This could get very interesting. Obama is messing with a country that owns two trillion dollars of U.S. Treasury securities. Do you think this might speed up China's gold buying?


  1. Things like this provoke the most agitated "Oh come on!"s from me. Seriously, you're going to levy tariffs.

    Higher prices, higher costs of production, reciprocal protectionism, and a misallocation of resources away from the efficient and to the inefficient is what we can expect from this.

  2. Makes one ashamed to be an American. If you can't compete on price or quality, lobby your government to establish artificial barriers to trade and eliminate the competition from foreign firms that are possibly serving the consumers better. Doubtless the vast majority of American citizens didn't even bat an eye at the headline, or used some economically illiterate justification to rationalize this poverty inducing policy. I mean, this stuff tilts me so much. It's so stupid.

    Sometimes the only thing that makes me feel a little bit--stress little bit--better in the face of this morass of economic ignorance is to imagine how Mises must have felt when he was writing Nationalekonomie in Geneva surrounded by the Nazis and everything to which he was so utterly opposed. But I still only feel a little bit better.

  3. I believe it was H.L. Mencken who said something like: Americans deserve to get what they vote for...good and hard.