Chinese consumers who buy $608 billion of goods from overseas make the idea of a trade war with China by the US totally daft.
World Bank data shows China’s imports, up 68% in five years, now amount to almost one-third of gross domestic product. The nation’s demand for foreign products is a boon for American companies, which exported $351 billion to China in the past five years.
US President Barack Obama’s 35% tariff on tires from China spurred a Chinese investigation into prices of US poultry and car products. Dangers of further escalation may be mitigated by the increasing benefit China provides the world economy. Poised to surpass Japan as No. 2 in GDP, its purchasing power is a lure to firms seeking new customers.
If the United States is daft enough to impose tarriffs for short term political gain then it may get a nasty surprise. Tarriffs can be a two way option.
Tyson Foods, the world’s biggest meat producer, entered China in 2001. Last year, the Asian nation accounted for 10% of the Springdale, Arkansas-based company’s $1.4 billion in beef sales and 12% of its $1.6 billion chicken sales.
Meat consumption per person is about 20 pounds a year in China, compared with 89 pounds in the US, Tyson estimates. That helps explain why Tyson joined Hormel Foods and 32 other agriculture companies and industry associations this month to push the Obama administration to refrain from engaging in a trade battle with China.
Lu Ting, an economist at Bank of America-Merrill Lynch in Hong Kong said, “The size of China’s economy and the extent to which the nation is entwined with other major economies may prevent an escalation” of conflicts.
Bloomberg reports Tyson — along with Austin, Minnesota-based Hormel, the second-largest US turkey processor — and 32 other agriculture companies and industry associations pressed the Obama administration refrain from tariffs on Chinese tire imports, concerned that China would retaliate against US products.
The groups wrote to US Trade Representative Ronald Kirk saying, “For some, the Chinese market is the difference between profitability and possible bankruptcy.”