Wednesday, June 5, 2013

China Ponders Tariffs on EU Wine in Response to EU Tariffs on Solar Panels; Repetitive Stupidity

No one wins a trade war. Ever. Not countries, not companies, and certainly not consumers. Yet, here we go again. People's Daily says China has more cards to play in EU trade dispute.
China still has plenty more cards to play in an increasingly ugly trade dispute with the European Union, the official People's Daily newspaper said on Thursday, accusing Europe of not realizing that its global power was waning.

The EU will impose duties on imports of Chinese solar panels from this week, a move that infuriated Beijing despite European attempts to soften the blow with a reduced rate. China in response announced on Wednesday its own anti-dumping and anti-subsidy probe into imports of wine from the EU.

"We have set the table for talks, (yet) there are still plenty of cards we can play," the newspaper wrote. "China does not want a trade war, but trade protectionism cannot but bring about a counter-attack."

A declining Europe needs to understand it can no longer laud it over other countries, the paper added.

"Times change and power rises and falls. Still this has not changed the deep-rooted, haughty attitudes of certain Europeans," it wrote.
Repetitive Stupidity

Time and time again, politicians place tariffs to "protect" jobs. In turn this provokes retaliation. This retaliation by China is mild so far. The implied threat is tariffs on Airbus or industrial components from Germany.

Chancellor Merkel understands this which is precisely why Germany was against the tariffs on solar panels, even though a German manufacturer was in play.

I have talked about this before. Here is a snip from EU On Collision Course With Germany Over Tariffs; Yet Another Reason for UK to Exit EU written May 20, 2013.
Damage of Tariffs

I do not believe it is possible to accurately predict the damage caused by inane tariffs. Much depends on how China would respond. But even if China did not respond, there is no advantage to artificially forcing up prices.
Krugman "Was" Right!

Inquiring minds may also wish to read Paul Krugman "Was" Right.
How and Why We Forget the Obvious

It is a simple statement of fact that the more goods and services we receive for our money, the better off we all are. The cheaper, the better!

Time and time again we forget free trade and lower prices are a benefit!

We forget because unions, socialists, and corporations forced to compete against the sun (or Skype), scream "unfair advantage" at the top of their lungs, via political contributions to politicians willing to "tax the sun" to be re-elected.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com