The China Chicken Trade Wars

The Chinese Ministry of Commerce plans to put a levy on broiler chicken parts sent to the most populous nation in the world by American poultry farmers. The tariffs could be as high as 105.4%. “The final ruling is that the there is a causal relationship between the U.S. dumping of broiler products and the losses suffered by the Chinese industry,”the Ministry said

The program will hurt some US  chicken producers, and it is a wonder that they did not agree to the demands of the People’s Republic to set prices more fairly.

The fight over chickens is only one salvo in a barrage between the US and China over whether goods are dumped in each others markets. Underlying these disputes are rising tensions over the value of the yuan. The House Ways and Means Committee has approved legislation that would punish China if it does not reset its currency–or rather would force the Commerce Department to do so. Whether the entire House will approve a bill is not certain. The President might also veto it.

No matter what happens in the House, the shouts from American companies and labor unions are growing louder. The steelworkers union says that it has lost jobs because of price manipulation by Chinese firms. China responds that the US can no longer be a low-cost producer of manufactured goods. The American workforce is too used to high pay and US manufacturers are no longer efficient or profitable. Detroit has proved that to be true, but China and earlier Japan, exposed that inefficiency through what probably were unfair trade practices.  That, in turn, damaged the profits at large US manufacturers. Because unions and poor management also played a role, it is hard to see where China’s action ended and the compensation demands of American unions began.

The unions’ problems and management mistakes of the past are not germane to the new debate. China puts tariffs on US chicken.   Earlier this year, the US puts tariffs on Chinese tires. The US had best hope that the latest confrontation means something to its economic superiority, which is faltering, in the years ahead. There will be hell to pay if a trade and a currency war happens over the next year or more.

Douglas A. McIntyre