The SGMA is warning sporting goods manufacturers that trade with China could become volatile in the near future. In response to the current administration’s decision to impose 25-35% safeguard duties on Chinese-made tires, China's Ministry of Commerce announced that it would be initiating antidumping investigations against U.S. exports.
According to Chinese authorities, the U.S. decision represents “a grave act of protectionism that sends the wrong signal to the world” at a time of economic crisis. The primary concern for SGMA is that the decision goes against the earlier G-20 pledge to avoid protectionism during this period of economic and financial turmoil.
Another problem is that this precedent-setting U.S. decision to grant relief in a China-specific safeguard case could embolden other trading partners to do the same. China has made it clear that it has concerns about trading partners using China-specific safeguards. China had been successful to date in warding off duties on goods made in China with near perfect success outside the textile sector. This decision by the United States now puts a major breach in that wall of defense, and the prospects for other countries taking similar actions in other product areas now has increased significantly.
In 2008, the U.S. exported $71.5 billion in goods to China and imported a whopping $337 billion in goods during the same year. The U.S. imports more goods from China than any other country, largely due to the artificially low value of China’s currency.
Trade analysts have published reports that state that it is unlikely the conflict will develop into a full scale trade war as the parties involved “have too much to lose.” The WTO will rule on the issue if the U.S. and China fail to sort things out over the next 60 days.
