China And The United States On The Brink Of Commercial Crisis, First Under The New Administration

Daily Forex Fundamentals | Written by ecPulse.com | Sep 14 09 07:50 GMT |

China protested severely on the United States decision to increase tariffs on automobile tires coming from China, in their attempt to preserve their local industry, indicating that this action taken by the U.S. administration violates international trade treaties. This decision was taken two days ago and will be applicable from September 26, where tariffs on tires imports from China will increase by 35% for the first year, then will fall by 30% for the second year and by 25% for the third year. Total imports of tires from China reached to 14.6 billion dollars by 2004, representing approximately 1/6 of the US needs. It is worth mentioning that four U.S. tire factories closed in the past two years causing a loss of more than 5 thousand jobs. In an action interpreted as retaliation, China conducted a series of investigations regarding the dumping and subsidy of auto and chicken imports from the United States. This refers to an illegal entrance of some goods in the market, and selling them below productivity costs in order to deluge markets with certain products in detriment of local the industry that will get hurt. These tensions precede the next G20 meeting set for later this month, where President Barack Obama will be meeting with his Chinese counterpart Hu Jintao. China explained through its official statement released on the official website of the Ministry of Trade that the U.S. decision violates trade treaties and promises made during the previous G20 meeting. Now a series of reactions may be taken by China that could slow the economic recovery that both pledged to support. With this strong rejection by the Chinese government for this protective action made by the U.S. administration, the first trade dispute may appear between the two Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk