Thursday, October 29, 2009

Retaliation by China?

In a previous entry possible effects of the Obama administration's imposition of a 35% tariff on Chinese tires for cars and light trucks were alluded to. The Smoot-Hawley Tariff Act was a major contributory cause of the Great Depression but historic lessons are not long remembered.

The Cost of Trade 'Enforcement' is a Wall Street Journal article with an ominious news item from China. The Chinese Ministry of Commerce imposed preliminary antidumping duties on imports of nylon 6 from some nations including the United States. Nylon 6 is found in varied products. They include socks and toothbrushes. American companies were hit with the harshest duties. U.S. corporation Honeywell and a U.S. unit of Germany's BASF were given 36% and 30% increases, respectively. So is this the start of a trend like the one preceding the Great Depression or will advocates of free trade be able to stem the obvious protectionist sentiment here and abroad?

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