The Growing Din of Protectionism

We feel it necessary to address the increased frequency of protectionist rhetoric, particularly in the United States. This sort of behavior is to be expected during a recessionary environment, at least to some degree. However, there is clearly a "tipping point" insofar as protectionist trade measures are concerned that once reached, will result in a cascade of consequences that will push the global economy deeper into Recession. The aformentioned "tipping point" is obviously an intuitive, subjective judgment. That being said, we feel that the following series of events  have set the stage for a potentially destructive trade dispute.

1) The CEO of Nucor goes on 60 Minutes and accuses the Chinese of "dumping" steel onto the market, i.e selling at a loss in order to gain market share.

2) A stimulus package which included a "Buy American" provision was signed by President Obama

3) Reports surface that attorneys have become involved in the steel dispute, and plan to file an official complaint.

4) The Minister of Commerce of the People's Republic of China writes an editorial in the Wall Street Journal entitled "Protectionism Doesn't Pay".

Now, we would not submit to our readers that a hostile trade conflict is inevitable. However, we would hold that for clues as to the length and severity of this global Recession, one needs only to monitor this situation.

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