Monday, April 02, 2007

Tariffs Anyone?

This month's highlight article is from The New York Times on the imposition of trade tariffs on paper imports from China. The article discusses the possibility that additional tariffs may be imposed on other manufactured goods.

http://www.nytimes.com/2007/03/31/business/31trade.html?_r=2&ref=business&oref=slogin&oref=slogin

Apparently, the US Commerce Secretary wants to retain some of his country's industrial capacity. It is about time frankly. The Chinese have effectively bought the United States' industrial capacity from them over the last 10 years. I doubt they will get anything much else of value out of their hoard of US dollars, should they try to actually buy something substantial with them. The articles goes on to say:

"The stock market at first reacted negatively to the news, on fears that a trade war with China could erupt, harming the dollar as well as stocks of companies that rely on trade with China. But stocks later recovered, ending the day barely changed. "

I sort of suspect that this market bouyancy may not continue should tariffs be broadly extended. Hmmm, what's the last time I think something like this happened........

http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff_Act

Until next month.

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