September 17, 2009

How does 'protectionism' impact your manufacturing?

Do you have plans to expand your manufacturing business to meet demand in growing markets like China and Brazil? Be sure to think it through very well - with your Congressman.

Many economists around the world are claiming recent US tariffs and counter-tariffs from countries like China and Brazil are cultivating a business climate ripe with protectionism. US trade officials discount this notion and firmly defend their actions as justifiable while reiterating their support of free trade.

So does China. So does Brazil.

Brazil is expected to apply penalties on US cotton, but this may be the real issue:

Last year, exchanges amounted to 63 billion dollars and US direct investment in Brazil in 2007 was 41.6 billion dollars. Outside the cotton subsidies issue, the United States and Brazil are also clashing on US protection of its ethanol production. Brazil, the second-biggest ethanol producer in the world after the United States, sees the US policy as hurting its export prospects. Read more in this AFP article

Let's see... These brief WTO rulings and resulting government trade actions have impacted tire manufacturers, meat producers, cotton growers, and ethanol markets. Not to mention a number of industries that touches each one of these - possibly yours.

In this world economy, it is hard to isolate any one of these tariff issues and not expect it to impact others. There is too much at stake for each country - and you, and me.

I bet it will all get cleared up at the upcoming G20 Summit, don't you?

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