Another Loser From the Latest Bout of Protectionism


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Another Loser From the Latest Bout of Protectionism

MACROECONOMICSTARIFFSTRADE WAR
 

Another week… another trade grenade lobbed across the world.

Apologies for bringing this up again… but I’m just the messenger!

It seems our esteemed world leaders are engaged in what can at best be described as protectionism and at worst be called a giant global pissing match!

But here’s the thing about protectionism: It tends to beget more protectionism.

That was certainly the case last week when the United States whacked 25% tariffs on $50 billion worth of Chinese imports.

The levies will kick in on July 6 and affect over 800 products worth an initial $34 billion. The remaining $16 billion will come into effect later.

China responded in kind, imposing 25% tariffs on 659 U.S. products – also worth an initial $34 billion (rising to $50 billion) and also beginning on July 6. In a statement, the Chinese foreign ministry said, “If the U.S. takes unilateral and protectionist measures that harm Chinese interests, we will respond immediately by taking the necessary decisions to safeguard our legitimate rights and interests.”

Well, they’re spot-on about “safeguarding legitimate rights and interests.”

That’s exactly what the United States is doing, too.

Unlike its trade war with Europe and Canada, America has long had a “legitimate rights” beef with China over intellectual property. The White House says U.S. companies are at an immediate disadvantage, as China’s government forces them to surrender any intellectual property if they want to do business there. Announcing the tariffs, Donald Trump said they’re “essential to prevent further unfair transfers of American technology and intellectual property to China, which will protect American jobs.”

This is fair enough. But it’s of little consolation to the companies unwittingly caught in the firing line

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