The EU announced that it may impose anti-dumping duties on Chinese screws and fasteners. A minor point, but one I could not resist blogging about.
One upshot of the big Democratic win last night are rising odds that there will be a trade confrontation between the US and China. Democrats have been itching to sanction China for trade violations owing to the slow pace of Yuan revaluation.The Bush administration took a gradual approach toward China, knowing full-well China has a very large weapon at its disposal: its massive holdings of US assets.
Anything that upsets the implicit bargain that China will fund our debt if we don’t hammer them too hard on their currency would be a catastrophic mistake given rapidly growing funding needs for the US. Watch how the Dems handle this; we’d expect them to talk loudly, but carry a little stick. They’ll scream for the cameras but not take much action since the downside is so great.
