Using fear as a proxy for import controls?

July 1st, 2007

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Recently, MSNBC had this news report: Tainted Chinese goods could lead to trade war:

From tainted pet food to lead-painted toy trains, a string of recalled Chinese-made goods threatens to tarnish the Made in China label in the United States and intensify calls for trade protection.

But there are signs that China trade sentiment is souring: in Congress, on the editorial pages of U.S. newspapers, and even in a new advertisement criticizing retailer Wal-Mart Stores Inc. for its heavy reliance on Chinese imports.

As we said before in US shooting own foot with tariff on Chinese goods:

At present, the US Congress is simmering in antagonism against China for her trade surplus against the US. They see China as a convenient scapegoat for America?s economic woes, accusing her of misconducts that includes currency ?manipulation,? unfair trade practices and so on.

Regarding Congress temptation to label China as a currency manipulator, we find this the case of the pot calling the kettle black.

Further down the article, we said:

We doubt either side will be stupid enough to sabotage each other.

We could be wrong on that. If this carries on, the US may be the one to fire the first shot. The result will most likely be ugly for both sides.