US Protectionism - The Pace Acclerates

12. September 2009 by Dan Walkow, CFA, CMT.

Canada is no stranger to US protectionist policies, to witt; the ongoing bullying of Canada’s softwood lumber industry which has been under attack from special interest groups in the USA for decades now. Ongoing actions by the US have all but brought the Canadian forest product industry to its knees.

So it comes as no suprise that over the past few weeks the US administration has responded to constiuant demands and levied heavy import taxes and duties on China.

On September 9th the US Commerce department levied duties of up to 31% on steel pipe from China.

Yesterday President Obama responded to the tire lobby and imposed a duties on tires from China and the duty starts at 35%. Needless to say the Chinese are not happy.

These actions on top of the recent measure against Mexico where the USA will no longer allow Mexican truckers to operate in the USA.

The American bailout program and subsidies have got Brazil’s attention. In particular Brazil recently brought a case of American cotton subsidies to the WTO and won.

It would appear the labour lobby in the USA has the ear of the administration and these actions are extremely punitive to free trade and the overall economic recovery.

This is shaping up to be a major trade war with the USA against everybody else, expect retaliatory measures, this story is far from over and given what happened historically when protectionism and trades wars erupt the prognosis is not good.

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