Protectionist trade practicesThe rancorous trade dispute between the two economic superpowers, the United States and China, is rattling nerves around the globe. The United States made the first strike. Washington announced it would slap tariffs of up to 35 percent on Chinese tires under its import safeguard regulations. Beijing retaliated by launching an investigation into American exports of cars and chicken meat to determine whether certain items were sold below their market prices or were subsidized.
It looks like a battle has begun, casting a dark cloud over the Group of 20 meeting, scheduled to be held in Pittsburgh in two weeks. If the tensions between the two economic powers continue to escalate, it will be like a splash of cold water on global economic recovery efforts - not to mention international efforts to revitalize global trade, which has been sluggish due to flagging economies at home.
The initial blame for the current squabble lies with the United States. Washington’s tariffs on Chinese tires go against the G-20 agreement to curb protectionist trade practices. President Obama’s decision to invoke the unprecedented import safeguard provision against Chinese products could unleash a highly anticipated call from American manufacturers for the government to take steps against cheap Chinese labor to protect their industries and jobs.
The imposition of heavy duties on imports could also trigger similar demands from other industries. Former President George W. Bush turned down four petitions for import restrictions against Chinese products, fearing it would trigger such an effect.
If the United States turns inward to protect its industries, it will not only provoke disputes with its trading partners, but it will also dampen global commerce and slow efforts to stimulate the world’s economy.
Washington should keep in mind that the international financial meltdown, which sparked the downturn in the global economy, originated in the United States. China for its part must act with a logic matching its economy. We hope the two sides will solve the problem through communication rather than harsh action.