So the US and China are going to duke it out over tires...with the US Administration announcing late Friday that it would impose an additional 35% on tire imports, much to the chagrin of the government in Beijing. Initial retaliatory shots are being fired over auto parts and chicken meat. According to a story in The New York Times:
Chickens are a longstanding issue in Sino-American trade relations. The United States only allows the import of chicken meat from countries that meet food safety inspection requirements that are certified by the United States Department of Agriculture as equivalent to American standards. But Congress, worried about low-cost Chinese chickens at a time of international worries about food safety in China, has banned the Agriculture Department for the last several years from spending any money to certify China’s procedures as equivalent. he Senate budget bill, expected to come up for a vote next week, would remove the ban. So China’s latest move could represent an attempt to influence that vote.
From a dairy perspective, China is a huge customer for US whey products. Though July, China had imported 59 million pounds of US whey, or about 23% of our export volume for the period.
From a broader economic perspective, some commentators have noted the danger of engaging trade tussles given the fragility of the global economy. We recall what happened in 2002 when the Bush Administration imposed tariffs on foreign steel -- the post-9/11 stock market rally ended and the market swooned into 2003. Perhaps the timing was coincidental. Perhaps it was not.
China-U.S. Trade Dispute Has Broad Implications
