Our "Great Depression II" Scorecard
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Brief: Another U.S.-China Trade Spat
Stratfor Today »-->February 25, 2010
Applying STRATFOR analysis to breaking news
China’s Ministry of Commerce accused the United States of “abusing its own trade relief measures” on Feb. 25, in response to a U.S. Department of Commerce’s decision on Feb. 24 to impose preliminary countervailing duties ranging from 11-13 percent on carbon and alloy pipes. The U.S. Commerce Department claims the duties will counteract the low prices of the pipes due to government subsidies that the Chinese producers receive. It is also considering adding stiffer anti-dumping duties. China and the United States have seen a rise in trade disputes since spring 2009 in the rocky global economic environment, many of which have been referred to the World Trade Organization (WTO). Among numerous complaints, China has launched investigations into imports of U.S. car parts, has made a preliminary ruling against U.S. chemical fibers and has imposed anti-dumping duties of 43 to 105 percent on U.S. chicken products; while the United States has imposed tariffs of 35 percent on Chinese-made tires, duties of 10-16 percent on Chinese steel piping, tariffs and additional duties on Chinese wire-decking, and anti-dumping duties on Chinese ribbons. These conditions will persist, as China continues to use artificially low credit, subsidies and rebates to help its exporters, and the United States strives to protect its ailing manufacturing sector from Chinese competition. But both sides have so far given warning shots and sought to avoid escalation into a full trade war.
Remember, by wide consensus among economists and historians, the Great Depression was deepened and prolonged by four principal policy mistakes:
Brief: Another U.S.-China Trade Spat
Stratfor Today »-->February 25, 2010
Applying STRATFOR analysis to breaking news
China’s Ministry of Commerce accused the United States of “abusing its own trade relief measures” on Feb. 25, in response to a U.S. Department of Commerce’s decision on Feb. 24 to impose preliminary countervailing duties ranging from 11-13 percent on carbon and alloy pipes. The U.S. Commerce Department claims the duties will counteract the low prices of the pipes due to government subsidies that the Chinese producers receive. It is also considering adding stiffer anti-dumping duties. China and the United States have seen a rise in trade disputes since spring 2009 in the rocky global economic environment, many of which have been referred to the World Trade Organization (WTO). Among numerous complaints, China has launched investigations into imports of U.S. car parts, has made a preliminary ruling against U.S. chemical fibers and has imposed anti-dumping duties of 43 to 105 percent on U.S. chicken products; while the United States has imposed tariffs of 35 percent on Chinese-made tires, duties of 10-16 percent on Chinese steel piping, tariffs and additional duties on Chinese wire-decking, and anti-dumping duties on Chinese ribbons. These conditions will persist, as China continues to use artificially low credit, subsidies and rebates to help its exporters, and the United States strives to protect its ailing manufacturing sector from Chinese competition. But both sides have so far given warning shots and sought to avoid escalation into a full trade war.
Remember, by wide consensus among economists and historians, the Great Depression was deepened and prolonged by four principal policy mistakes:
- Contraction of the money supply
- Protectionism
- Massive Regulation
- Higher Taxes
We are currently going 1 for 4 on not repeating these mistakes...actually, I'm going to be generous and call it 1.5 for 4 because cap-and-trade and healthcare look mighty wounded, if not dead, maybe 1.25 as Dodd's financial regualtion reform looks to be moving again. Let's hope that is enough, but I'd sleep better if we were solidly batting above .500 on this.
posted by Donny Baseball at 11:46 AM
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