trade war brewing?

[Azazello1313]

in case you missed it over this past weekend (why does all the good news come out friday at midnight? ), here is a quick recap...

 

US to impose tariffs on Chinese tires: Obama administration imposes tariffs on China tires for 3 years, a decision that could anger Asian powerhouse

 

China Strikes Back on Trade: Beijing Threatens U.S. Chicken, Car Parts After Washington Slaps Stiff Tariffs on Tires

 

Stocks head lower on US-China trade concerns: Major indexes fall in early dealings amid concerns about US-China trade dispute

 

Tire Tariffs Are Cheered by Labor: Mr. Obama ordered the tire tariffs after the United States International Trade Commission, an independent government agency, determined that a more than tripling of Chinese tire imports had disrupted the $1.7 billion tire market....President George W. Bush had rejected four similar recommendations from the trade commission, angering organized labor

 

some good analysis here:

 

With Obama... this dip in the protectionism pool feels like the beginning of something much greater. Many Democrats feel warm and fluffy about protectionism, as a mechanism to improve labor standards or an ironclad guarantor of union jobs. This love affair isn’t going to stop. Thea Lee, the chief economist of the AFL-CIO, told the New York Times that “the trade decision was the president’s first down payment on his promise to more effectively enforce trade laws, and it’s very much appreciated.” Unions are already demanding additional action against Chinese steel....

 

All presidential administrations engage in protectionism—it’s often the cost of pushing through other forms of trade liberalization. While the previous two administrations engaged in these kinds of actions, they could proudly point to ambitious agendas of trade liberalization as well. The Clinton administration sought to add contentious labor and environmental side agreements to its trade deals—but Clinton also spent political capital to get NAFTA and the Uruguay round through Congress. Bush imposed the steel tariffs—but his administration also secured the passage of (now expired) trade promotion authority, launched the Doha round, and completed major trade agreements with Australia and Central America. President Bush also rejected this action against Chinese tires on four separate occasions.

 

Barack Obama has no record of trade liberalization to fall back on when defending this measure. Indeed, this is the first major trade action his administration has taken. Based on the political reporting of this trade action, it seems clear that Obama will use trade policy as a sop to his base in order to keep them behind his major policy initiatives on health care, financial regulation, and environmental protection.

 

Obama has largely decided to become a domestic-policy president. His supporters, his base and the politicking of his underlings indicate things will only get worse. With the global economy in deep crisis, protectionism is a terrible way to build a recovery.

 

what do you think, wiegie?

[moneymakers]

Tires are a scam.

They are made to wear out.

 

You put a man on the moon in the 60s but cant make a tire that wont wear out or go flat.

 

Guess the enviroment doesn't count when it comes to tires.

[NAUgrad]

Tires are a scam.

They are made to wear out.

 

You put a man on the moon in the 60s but cant make a tire that wont wear out or go flat.

 

Guess the enviroment doesn't count when it comes to tires.

We didn't put man on the moon. We faked it.

[evil_gop_liars]

Should this go on Obama's list of doing nothing or bad decisions?

[bpwallace49]

Barack Obama has no record of trade liberalization to fall back on when defending this measure. Indeed, this is the first major trade action his administration has taken

 

If one traditionally comes before the other . . wouldnt it be more prudent to start fear-baiting IF he is given an opportunity to liberalize trade and DOESNT act?

 

There has always been a ying to the yang with trade and presidential decrees. Do you think that Clinton (remember . . a DEMOCRAT) signed NAFTA which pissed off unions?

 

Not even one full year yet . . . . .LOL

[muck]

Tire tarriffs are probably a bad idea for most Americans (why? tire prices are higher).

 

I am hopeful this doesn't spill over into other aspects of the US / China relationship that are far more important than tires.

[Azazello1313]

There has always been a ying to the yang with trade and presidential decrees. Do you think that Clinton (remember . . a DEMOCRAT) signed NAFTA which pissed off unions?

 

I'm not sure I get your point, but yeah, clinton pushed for and signed NAFTA. clinton was good on trade, arguably better than either bush.

[bpwallace49]

I'm not sure I get your point, but yeah, clinton pushed for and signed NAFTA. clinton was good on trade, arguably better than either bush.

 

All presidential administrations engage in protectionism—it’s often the cost of pushing through other forms of trade liberalization. While the previous two administrations engaged in these kinds of actions, they could proudly point to ambitious agendas of trade liberalization as well. The Clinton administration sought to add contentious labor and environmental side agreements to its trade deals—but Clinton also spent political capital to get NAFTA and the Uruguay round through Congress. Bush imposed the steel tariffs—but his administration also secured the passage of (now expired) trade promotion authority, launched the Doha round, and completed major trade agreements with Australia and Central America. President Bush also rejected this action against Chinese tires on four separate occasions

 

My point was that we havent seen Obama get a chance to do trade liberalization yet. If an opportunity is presented, and he fails to do so, then by all means, bash the guy.

 

But to jump on him when he is focused on health care and not even a year in office without giving him a chance to "redeem" himself with correspoinding free trade agreements seems presumptuous.

[Ursa Majoris]

But to jump on him when he is focused on health care and not even a year in office without giving him a chance to "redeem" himself with correspoinding free trade agreements seems presumptuous.

Presumptuous? Obama usually hasn't finished bringing his mandibles back together after speaking before Az, Perch and the rest post the latest WSJ / Newsmax / Fox criticism.

[Azazello1313]

here's more from the guy I quoted in the first post.

 

When the Obama administraton announced the decision to slap a 35% tariff on Chinese tire imports, I was pretty sure that free traders would be incensed. And I haven't been disappointed -- even the financial markets are freaking out over this one.

 

We trade enthusiasts are an excitable lot, however, what with everything leading to the falling off of cliffs, crossroads being reached, and red zones being breached. Seven years ago, the allegedly free-trade Bush administration imposed steel tariffs that were found to be WTO-inconsistent. There was a lot of gnashing of teeth and wailing at the time about the end of the open economy as we knew it -- yet the world trade system proved to be pretty robust. So maybe my trade compatriots are exaggerating things a wee bit, yes? In all likelihood, won't this be resolved via the WTO dispute settlement mechanism about 18 months from now?

 

For the first eight months of the Obama administration, I've been resisting the urge to shout "protectionism" at the drop of the hat. This time, however, there are four reasons why I'm feeling much more nervous:

 

1) This isn't your garden-variety protectionism. Last month, Chad Bown explained the Financial Times why this decision was a very special kind of protectionism:

 

[A] little-known loophole in the rules governing China’s 2001 WTO accession makes it easy for a global protectionist response to spread faster and further than that which took hold in 2002. Nowadays, once any one country imposes a China safeguard on imports, all other WTO members can immediately follow suit, without investigating whether their own industries have been injured.

So this trade dispute can metastasize more quickly than most.

 

2) Beijing is not lying down on this. China's furious and swift reaction points to another problem: the United States is not the only country feeling protectionist urges at the moment. Economic nationalism in China is riding quite high at the moment, as Keith Bradsher suggests in the New York Times:

 

The Chinese government’s strong countermove followed a weekend of nationalistic vitriol against the United States on Chinese Web sites in response to the tire tariff. “The U.S. is shameless!” said one posting, while another called on the Chinese government to sell all of its huge holdings of Treasury bonds....

 

China had initially issued a fairly formulaic criticism of the tire dispute Saturday. But rising nationalism in China is making it harder for Chinese officials to gloss over American criticism.

 

“All kinds of policymaking, not just trade policy, is increasingly reactive to Internet opinion,” said Victor Shih, a Northwestern University specialist in economic policy formulation.

 

Methinks Shih and Bradsher are exaggerating things a wee bit -- imagine for a moment if U.S. foreign policy was driven by people getting upset on the Internet -- but you get the point.

 

The U.S. use of this provision is doubly troubling, because from Beijing's perspective their WTO accession negotiations were seen as a humiliating kowtow to the power of the West. China is not going to be selling its bonds anytime soon, but Beijing has not quite mastered how to cope with these kinds of domestic pressures, so they could do something really, really stupid.

 

3) Politically, Obama has boxed himself in. As egregious as the Bush steel tariffs were, they were targeted at a sector and not a country. Furthermore, the Bush administration responded to the hubbub very quickly by watering down the worst effect of the tariffs.

 

The Obama administration's new tariff is expressly directed at China. And I'm not saying that China is blameless here. But because it's country-specific, the administration has less room to maneuver -- either the tariffs are applied against China or they aren't. It can't walk this back without it looking like a flip-flop. Which means that there's little room for concession or negotiation.

 

4) Obama's base scares me on trade. When the Bush administration did what it did, it was fulfilling a campaign promise to the state of West Virginia steelwokers. Fortunately, the rest of Bush's winning political coalition was not seeking trade relief. So the protectionist instinct pretty much ended with the steel tariffs -- and everyone in the Bush administration knew that they'd be overturned by the WTO eventually.

 

With the Obama administration, however, this feels like the tip of the iceberg. Most of Obama's core constituencies want greater levels of trade protection for one reason (improving labor standards) or another (protecting union jobs). This isn't going to stop. "Trade enforcement" has been part and parcel of Obama's trade rhetoric since the campaign. The idea that better trade enforcement will correct the trade deficit, however, is pure fantasy. It belongs in the Department of Hoary Political Promises, like, "We'll balance the budget by cracking down on tax cheats!" or "By cutting taxes I can raise government revenues!" It. Can't. Happen.

 

If I knew this was where the Obama administration would stop with this sort of nonsense, I'd feel a bit queasy but chalk it up to routine trade politics. When I look at Obama's base, however, quasiness starts turning into true nausea.

 

 

this is a guy I've been reading for a long time, and he's NOT some right-wing hack. I don't recally him endorsing either candidate in the last election, but I know he endorsed kerry in 04. feel free to explain why you think he's wrong.

[bpwallace49]

here's more from the guy I quoted in the first post.

 

 

 

2) Beijing is not lying down on this. China's furious and swift reaction points to another problem: the United States is not the only country feeling protectionist urges at the moment. Economic nationalism in China is riding quite high at the moment, as Keith Bradsher suggests in the New York Times:

 

 

 

Methinks Shih and Bradsher are exaggerating things a wee bit -- imagine for a moment if U.S. foreign policy was driven by people getting upset on the Internet -- but you get the point.

 

The U.S. use of this provision is doubly troubling, because from Beijing's perspective their WTO accession negotiations were seen as a humiliating kowtow to the power of the West. China is not going to be selling its bonds anytime soon, but Beijing has not quite mastered how to cope with these kinds of domestic pressures, so they could do something really, really stupid.

 

3) Politically, Obama has boxed himself in. As egregious as the Bush steel tariffs were, they were targeted at a sector and not a country. Furthermore, the Bush administration responded to the hubbub very quickly by watering down the worst effect of the tariffs.

 

The Obama administration's new tariff is expressly directed at China. And I'm not saying that China is blameless here. But because it's country-specific, the administration has less room to maneuver -- either the tariffs are applied against China or they aren't. It can't walk this back without it looking like a flip-flop. Which means that there's little room for concession or negotiation.

 

4) Obama's base scares me on trade. When the Bush administration did what it did, it was fulfilling a campaign promise to the state of West Virginia steelwokers. Fortunately, the rest of Bush's winning political coalition was not seeking trade relief. So the protectionist instinct pretty much ended with the steel tariffs -- and everyone in the Bush administration knew that they'd be overturned by the WTO eventually.

 

With the Obama administration, however, this feels like the tip of the iceberg. Most of Obama's core constituencies want greater levels of trade protection for one reason (improving labor standards) or another (protecting union jobs). This isn't going to stop. "Trade enforcement" has been part and parcel of Obama's trade rhetoric since the campaign. The idea that better trade enforcement will correct the trade deficit, however, is pure fantasy. It belongs in the Department of Hoary Political Promises, like, "We'll balance the budget by cracking down on tax cheats!" or "By cutting taxes I can raise government revenues!" It. Can't. Happen.

 

If I knew this was where the Obama administration would stop with this sort of nonsense, I'd feel a bit queasy but chalk it up to routine trade politics. When I look at Obama's base, however, quasiness starts turning into true nausea.

 

 

this is a guy I've been reading for a long time, and he's NOT some right-wing hack. I don't recally him endorsing either candidate in the last election, but I know he endorsed kerry in 04. feel free to explain why you think he's wrong.

 

Thts is a very reasoned and well thought out article that clearly explains why it would be an issue (the first article was contradictory).

 

Hmmm. Another lose/lose scenario. Either we keep our Chinese overlords happy and let them undercut us at every turn which will cost US workers JOBS. Or we toughen up and turn protectionist, which will save/genertae more us JOBS but will hurt our overall global trade and economy.

 

Damned if you do, dmaned if you dont. I wish we had a compromise or solution.

 

One thing I never understood was that we import a hell of lot more stuff from China than China buys from us. How long should the US consumerism machine continue to finance Chinese economic expansion? How long has it been since we actually exported as much as we imported?

[wirehairman]

How long has it been since we actually exported as much as we imported?

 

Somewhere around 1971.

[cre8tiff]

Somewhere around 1971.

 

Coincidence? I think not.

The decade that began from the 1970's was period of substantial economic growth, in the history of Wal-Mart. In 1971, Wal-Mart started off a huge expansion by opening a gigantic center and and also a home office in Bentonville, Arkansas. The 70's decade saw a substantial rise in the number of employees and turnover which amounted to about 1500 associates and a sales worth $44.2 million that left a lot of entrepreneurs spellbound. One of the biggest landmark of this decade was the sale of shares "over the counter". The two significant years from the point of view of the company were, 1971 and 1975. In the month of May of 1971, the stocks of Wal-Mart experienced a 100% split and an astonishing market price of 47$ per share was achieved. In the year 1975 an amazing sales worth $340.3 million was achieved. The company had expanded to 7500 associated and had 125 operational stores. In 1977, in a massive takeover Wal-Mart acquired the Hutcheson Shoe Company and also introduced a branch for pharmaceuticals by the name Wal-Mart pharmacy. By the end of the decade, Wal-Mart had become a giant in the American retail industry with a turn over of more than 1.248 billion dollars in sales and 276 stores managed massive yet efficient staff of 21, 000 associates.

Edited September 17, 2009 by cre8tiff

[Perchoutofwater]

Tariffs are bad, particularly in this climate.

[Riffraff]

I'd have little issue if we stopped trading with China.

 

We are helping them in ways the common person fails to understand. They are not our "friend." Quite the opposite.

 

A prime example will be on display on October 1st:

 

San Francisco Chronicle

September 14, 2009

Pg. 3

 

China Parade To Showcase Growing Military Might

 

By Christopher Bodeen, Associated Press

 

Beijing -- China's biggest military parade in a decade will show off an army bristling with formidable new capabilities and deliver a potent message to the United States and others not to underestimate Beijing's determination to defend its interests at home and abroad.

 

The military display is expected to be the centerpiece of a grandiose parade through Beijing on Oct. 1 to celebrate the 60th anniversary of the founding of the People's Republic. A preview rumbled through the Chinese capital a week ago, giving an excited citizenry and foreign military analysts a first-time glimpse at some cutting-edge weaponry.

 

Upgraded intercontinental DF-31 nuclear missiles capable of striking Washington rolled on long-bed trucks along with advanced short-range DF-11 and DF-15 missiles, sea-skimming YJ-83 anti-ship missiles and DH-10 long-range cruise missiles - intended to strike targets in rival Taiwan and deter the U.S. Navy from coming to the island's defense. Not seen in the preview but expected to appear in a fly-over above Tiananmen Square are domestically produced J-10 jet fighters.

 

The advanced equipment is the fruit of a 20-year military buildup fueled by annual double-digit percentage increases in defense spending and buoyed by rapid economic growth that has enabled the government to spend lavishly.

 

The Communist leadership's willingness to put so much equipment on public display reflects its growing faith in the People's Liberation Army's capabilities and its belief that the defense muscle will translate into new strength for Beijing internationally.

 

"The exercise is aimed at not only showing the Chinese people some of the symbols of China's new great power status, but also showing foreigners that policies based on the presumption of Chinese weakness must be changed," said Denny Roy, an expert on the Chinese military at the East-West Center in Honolulu.

 

Chief among Beijing's targets is U.S. support for Taiwan, the self-governing island that China considers its own territory, and the American military's continued naval and airborne surveillance missions off the Chinese coast, Roy said. Japan, Vietnam and other nations with territorial disputes with Beijing in the South China and East China Seas are also likely audiences for the display of Chinese military might.

 

Officially, Beijing says the parade is nothing more than a move to boost patriotism and showcase the PLA's modernization drive - an explanation that fits with the oft-repeated government line that the Chinese military buildup poses no threat to others. Chinese defense spending officially reached $71 billion this year, though analysts believe the actual figure is much higher. The spending is second to the U.S. but a fraction of American defense spending.

 

The parade will "demonstrate the positive image of China as a country seeking peaceful development," Senior Col. Guo Zhigang, a deputy commander of the event's training camp, was quoted as saying by the official China Daily newspaper.

 

Aside from armaments, the parade will feature thousands of goose-stepping troops from the PLA and the People's Armed Police, a paramilitary force whose mission is to quell domestic unrest, as they did in Tibet last year and Xinjiang this summer. President Hu Jintao is expected to review the assembled marchers, standing in an open-top Red Flag limousine as his predecessors have.

 

Still, the event marks a profound change from past decades when China shrouded its relative military weakness in secrecy. Despite being the world's largest standing military with 2.3 million members, the PLA was long derided as under-equipped and underfunded. For decades, its plans to invade Taiwan, when Beijing had little air or naval power, were mocked as the "million-man swim."

Our greed to save a buck can potentially lead to the US's worst war.

[bpwallace49]

And yet Wal-Mart is still incredibly popular . . .

[Azazello1313]

I'd have little issue if we stopped trading with China.

 

oh, I think you would. at least once the ramifications came to pass.

 

Our greed to save a buck can potentially lead to the US's worst war.

 

on the contrary, the greatest deterrent to any future conflict with china is economic interdependence. countries that trade with each other don't fight.

[evil_gop_liars]

I'd have little issue if we stopped trading with China.

 

We are helping them in ways the common person fails to understand. They are not our "friend." Quite the opposite.

 

A prime example will be on display on October 1st:

 

 

Our greed to save a buck can potentially lead to the US's worst war.

 

Have to agree here!!!

[bpwallace49]

on the contrary, the greatest deterrent to any future conflict with china is economic interdependence. countries that trade with each other don't fight.

 

Completely false.

 

Quick quiz . . . who was Germany's largest trade partner before WWII?

 

Answer . . . France.

[Riffraff]

on the contrary, the greatest deterrent to any future conflict with china is economic interdependence. countries that trade with each other don't fight.

I agree with the premise that counties with a mutual trade interest generally don't fight. But it's never all inclusive. Such as our former ally Iraq: It took a tiny adjoining country (Kuwait) to get us started in war and now we've been fighting in Iraq for nearly 20 years.

 

Many of the USA's foes in war have been major trade partners.

 

Greatest deterrent is the credible threat of retailiation.

Edited September 17, 2009 by Riffraff

[Azazello1313]

Completely false.

Quick quiz . . . who was Germany's largest trade partner before WWII?

Answer . . . France.

 

I have no idea if that particular fact is true or not (wouldn't mind seeing a link)....but the 1930s was a time of enormous protectionist trade wars, which bolsters my point awfully well.

[Riffraff]

oh, I think you would. at least once the ramifications came to pass.

You are correct sir. I stand corrected.

 

I want me some earlier, smaller versions of T-Rex from China.

WASHINGTON — About 125 million years ago a tiny version of Tyrannosaurus rex roamed what is now northeastern China. Tiny, that is, by T. rex standards — you still wouldn't want to meet it face to face. Described by paleontologist Paul Sereno as "punk size," this early predator stood about nine feet tall.

 

It just seems small compared to the giant T. rex that evolved millions of years later and was as much as 100 times more massive.

 

"It really is the blueprint for the later (T. rex) dinosaurs," Sereno said, "it was a blueprint that was scalable."

 

Described for the first time in Thursday's ScienceExpress, the online edition of the journal Science, the new dinosaur has been named Raptorex kriegsteini.

 

Sereno reports that Raptorex has all the hallmarks of T. rex, including a large head, tiny arms and lanky feet — just in a smaller size.

 

"What we're looking at is a blueprint for a fast-running set of jaws," Sereno said at a briefing arranged by the American Association for the Advancement of Science.

 

The giant T. rex dominated much of the planet from about 90 million years ago until the great extinction 65 million years ago.

 

Raptorex would have weighed only about 150 pounds, said Sereno, of the University of Chicago and also a National Geographic explorer in residence.

 

The newly described remains were found by fossil hunters in northern China, smuggled out of that country and offered for sale to collector Henry Kriegstein of Higham, Mass., Sereno said. Kriegstein, for whom the animal is now named, donated the materials to science and they will be returned to China.

 

The fossil was encased in a single block of stone, Sereno said. That stone allowed the researchers to trace the find to its original location.

 

The way the bones were fused indicates the animal died at the age of five or six, which is nearly adult. It would have matured at eight or 10 and been old by 20, added co-author Stephen Brusatte of the American Museum of Natural History.

 

The find also shows that features such as the animal's tiny arms did not evolve as T. rex grew larger, but were present in the much earlier forms, Brusatte said.

 

"Much of what we thought we knew about T. rex turns out to be simplistic or out-and-out wrong," Brusatte said.

 

Sereno said Raptorex was a predator. Some scientists debate whether T. rex was a predator or scavenger.

 

Dinosaur expert John R. Horner of the Museum of the Rockies at Montana State University was cautious about the find.

 

"It's hard to evaluate their conclusions," he said, calling the report interesting but adding that the drawing in the paper shows some differences from a T. rex in addition to being smaller.

 

However, he added, he didn't see anything that would disprove their theory that Raptorex was an ancestor of T. rex.

 

The research was funded by the Whitten-Newman Foundation and the National Geographic Society.

[bpwallace49]

I have no idea if that particular fact is true or not (wouldn't mind seeing a link)....but the 1930s was a time of enormous protectionist trade wars, which bolsters my point awfully well.

 

I was wrong .. . Germany was France's SECOND largest trade partner.

 

http://books.google.com/books?id=TXDU1apCh...;q=&f=false

[Perchoutofwater]

The last time a president from Illinois started imposing tariffs it didn't end well.

[Azazello1313]

I was wrong .. . Germany was France's SECOND largest trade partner.

 

http://books.google.com/books?id=TXDU1apCh...;q=&f=false

 

2nd largest trading partner at a time when everyone is constructing trade barriers and trade in general is way down. and actually, looking at your link, I don't see where the page you link to says anything about france being germany's largest, or second largest, trade partner. here is what your link DOES say:

[WWI] appears to have led to a reduced reliance on Germany for most states, with the exception of its allies. Here, there is a clearer distinction in the tendencies for dependence to be higher among allies than adversaries for the coming war (WWII).

 

seems to boltser my point, and this in a book titled "The Liberal Illusion: does trade promote peace?", which would indicate the author is trying to make the opposite point.

 

if anything, your argument would be stronger pointing to WWI where, as the author implies in the section you linked, trade volume was not as indicative of who lined up on which side as it was in WWII. but that was a much different era of global trade, more the culmination of the 19th century era of imperialism and even some remnants of mercantilism, where the economic pressures were about racing to accumulate colonial resources. the fact that some countries had colonies and some didn't led to trade imbalance and a general tension in the balance of power between european nation states. it was very much another trade war of sorts escalating to the great war.