Fisher Investments Editorial Staff
Taxes

Tackling Trade Tiffs

By, 05/30/2012

One theme in the news recently has been trade—specifically, the rather predictable backlash countries should by now know to expect in response to various trade barriers. Here are a few examples.

Beijing Flares Up at US on Solar Tariff

Predictably, Chinese officials are less than thrilled in the wake of 31% tariffs the US imposed on some Chinese solar manufacturers last week. Also not so surprisingly, a Chinese investigation of US clean energy projects in five states has uncovered “violations of international trade law,” though details were scant. Some trade disagreements have the potential to escalate—with retaliatory tariffs that potentially drag in other parties. But the truth is, nations spat all the time, and most do little more than irritate both sides and result in some incremental back and forth that ultimately amounts to much ado about not so much.

Argentine Import Rules Spur EU Action

Argentina’s recently made a handful of moves that have angered some large economies—particularly in Europe. And though the EU’s planning on filing a complaint with the World Trade Organization (WTO), ideally it won’t require their action because if anything, that could actually heighten the tension—particularly if Europe begins imposing retaliatory tariffs, etc.

India May Ban European Airlines

A classic case of the potentially self-escalating nature of trade disagreements: “’We will take retaliatory actions to counter steps taken by [the] EU. If Europe bans our carriers we will ban theirs as well,’ the [senior Indian government] official told reporters.” Far more advisable would be lowering barriers all around and avoiding what can be costly economic effects of trade and tariff spats.

All in all, the tiffs alluded to don’t seem problematic—yet. And should they remain contained, the impact seems small (if discernible at all). But nonetheless, protectionism can beget further protectionism, and in that way, this is clearly a topic to watch.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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