Wednesday, September 16, 2009

Here’s Why the U.S.-China Tire Tiff Could Lead to Great Depression II

the 44th President of the United States...Bara...

Image by jmtimages via Flickr

By Martin Hutchinson

When U.S. President Barack Obama late Friday (Sept. 11) signed an order that imposed an additional duty of 35% on tires imported from China, it set up the potential for an old-fashioned trade war.

Currently, global trade is down only 20%. During normal times, worldwide commerce would recover on its own. But as most investors understand all too well, these aren’t normal times.

Global trade fell by 35% after last September’s financial crash. And it plunged 65% between 1929 and 1932 as a result of the Great Depression. With the worldwide economy already in a weakened state, a bare-fisted trade war between the world’s two most important trading partners – the United States and China – would be devastating.

Call it “Great Depression II: The Sequel.”

Here’s Why the U.S.-China Tire Tiff Could Lead to Great Depression II

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