Tuesday, 2 October 2012

Trade War: The power of "Chicken Feet"



The decision of President Barack Obama to impose new tariffs on Chinese tires for three years to protect American industry strongly displeased China. These rights are amounted to 35% the first year, 30% the second and 25% the third. This decision which represents a severe form of protectionism, has undermined the economic relationship between the two countries. The imposition of tariffs was intended to reduce imports of Chinese goods, but it had as consequence the destruction of 100,000 jobs in China, and it costs about a billion dollars to the Chinese tire industry.

 
Two days after this decision, China has formally launched an anti-dumping and anti-subsidy measures on U.S. chickens imports, knowing that the importation of wings and chicken feet in China is a great business for several American companies. The Chinese have an immoderate love for chicken feet, while these pieces often end up in the dustbin of Americans. More than half of the chicken pieces sold in China are wings and chicken feet, and this trade is around 800 million. For Americans, this market is unique, and the Chinese are particularly fond of American chicken feet, meatier and juicier.
 
The Chinese government, on its part, has imposed taxes on importation 105.4% on American chicken products for a period of five years. Taxes are likely to have a significant impact on American exporters who count on selling chicken feet for Chinese.
 
China and United States are two countries considered as relevant trading partners, such a trade war would definitely affect both of them. In other words, why they would go through a trade war and make loses, while they are able to make profits. The two countries need to readjust their imposed tariffs to avoid a trade war not serving any of them.

2 comments:

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  2. This reminds me of the 1963 Chicken Tax imposed by LB Johnson to punish French and German governments for their tarriffs on US chicken imports. You might find this wikipedia article interesting! http://en.wikipedia.org/wiki/Chicken_Tax

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