A trade spat between America and China erupted this week after the US slapped a 35% tariff on Chinese-made pneumatic tyres. The US claims that there has been a surge of tyre imports from China in recent years that has cost the domestic tyre industry 5,000 jobs. In response, China has threatened to block imports of American chicken and auto parts.
What the commentators said
No wonder the spat rattled markets this week. It was a reminder that protectionism turned the downturn of the late 1920s into a global depression, said Hans Redeker of BNP Paribas. This, however, is “protectionism without protection”, said Charles Freeman on FT.com. There are plenty of other low-cost countries that tyre makers can import from, so these tariffs are hardly going to bolster local production. The move looks like a sop to Obama’s union allies; it appears the president is “desperate to shore up support” for health-care reform, said Economist.com.
Undermining America’s free trade credentials to placate his “political base” is a “dangerous game”, said The Wall Street Journal. “To see where this may lead”, just look at the long list of US lobbies that called for tyre tariffs “because of the precedent they would set”. But America has a powerful incentive to avoid sparking “a fully fledged trade war”, said Lex in the Financial Times. China is America’s largest creditor and is thus effectively underwriting its stimulus programme. In short, it has “more effective tools at its disposal” than blocking chicken imports.