According to Investopedia protectionism refers to government actions and policies that restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. It is true that although the world economy has shown small signs of recovery, future remains uncertain. Can trade protectionism policies delay recovery?
As I mentioned in a previous post, China has turned to domestic demand in order to cover the losses from the reduction in global demand but exports remain the key part of China's economic engine. “Love-hate” relationship between China and U.S. in global trade deteriorated early this week after Obama’s decision to impose a new tariff of 35 per cent on Chinese tire imports on top of an existing 4 per cent tariff sending, as Chinese government officers support, a dangerous protectionist signal before a G20 summit in September that could influence global recovery. Chinese sources claim that China would now investigate the imports of U.S. vehicles and agricultural products….Are we going towards a tariff war?
For your information the U.S. trade deficit with China totaled $103 billion in the first half of 2009 and about $268 billion in 2008. See also the below Graph from the U.S. Department of Commerce with the U.S. imports from China.
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