If the US/China start down this road, where does it end? Or is this more a one off occurrence and unlikely to be repeated in a meaningful way?
Who knows Steve? One thing I have noticed is that with Obama and Rudd we seem to be seeing the triumph of symbolism and rhetoric over serious policy in the new world political order. This is unsustainable on a political level because people see through the spin and fog eventually. Mind you at least Obama is having a red hot go on real health policy reform, even if it doesn't succeed.
With the domestic political pressure in the US to "look after their own" via tariff protection well entrenched, for example in the farm sector, then I can definitely see more cases of Obama making all the right free trade statements on one hand but actually doing this more often on the other! Probably part of calling in a few political favours to get his health plan through...
No doubt the Chinese will reciprocate but you have to ask what does the US lose from this? Imports of high value / high tech goods into China from the US are the only meaningful sector and China needs these so raising tariffs on them is likely to be counter productive. There isn't much of other US imports into China so you have a strong incentive for the US to do this - there isn't much downside in terms of their exports to China. Particularly when China keeps playing other games with pegging the yuan to the US$ to keep their products cheap. Why should the US keep being nice when they keep getting stung in return?
IMO the real problem is the imbalance created in a relatively open, free and democratic country like the US trying to deal with a strictly controlled, one party state that has little respect for human rights, like China. The playing field is never going to be level and it is probably better to just acknowledge that rather than keep up this charade that we can all just get along when our core values are polar opposites. Something has to give...
