Would China put sanctions on U.S.?

Scott Tong Sep 14, 2009

Would China put sanctions on U.S.?

Scott Tong Sep 14, 2009


Steve Chiotakis: China is furious this morning over U.S. trade sanctions.
Late Friday night, the White House imposed 35 percent tariffs on tires from China. Beijing calls that “grave protectionism.” And it’s already exploring tariffs against American products. Tit for tat?

We’re joined now by Marketplace’s Scott Tong with us live from Shanghai this morning. Hi, Scott.

Scott Tong: Good morning, Steve.

Chiotakis: So how angry is this reaction from China?

Tong: Well, it’s angry because of how quickly it came. The news from the White House came Saturday China time, and Beijing pushed back on Sunday, which is highly unusual for Chinese officials. I mean, I’d say it’s unusual for officials from anywhere — I mean, how often does the U.S. president interrupt his vacation to make an urgent announcement? So that, it’s that level of important. China’s also angry because of what’s at stake here. Right now, this is just about Chinese tires. But what happens if other American industries play follow the leader and they go to Washington for protection too? Textiles or seafood or steel? So China has a lot to lose, Steve, from trade war.

Chiotakis: So if we go down this road, Scott, what do American industries have to lose?

Tong: Well, the focus now is on American automotive an poultry exporters. Beijing is investigating those industries for unfair trade practices. But China could shut the door on American products in other ways. It could suddenly decide to enforce certain standards that say American-branded toothpaste or grain doesn’t meet. When the swine flu broke out globally, China suddenly found a way to keep out American pork, and even though that flu isn’t related to pigs. So all kinds of industries are mindful of this and wary they could end up in the cross-fire.

Chiotakis: Yeah. And don’t the two countries, though, need each other, Scott?

Tong: Well, they do, on all kinds of things. Climate change, North Korea, the U.S. would love China to keep buying American debt, of course. So one school of thought thinks this could be orchestrated posturing. The Obama administration needs this to get organized labor on board for health care, Chinese officials have their own domestic constituencies. So now is this all choreographed? It’s hard to know, but we’re gonna find some more signals soon, when the U.S. president meets the Chinese president next week at the G20 summit in Pittsburgh, Steve.

Chiotakis: All right. Marketplace’s Scott Tong joining us from Shanghai. Thanks, Scott.

Tong: OK, thanks, Steve.

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