OPEC was Trade Retaliation

China's reaction [Bloomberg] to 35% tariffs by the U.S. on its tires has it investigating dumping and subsidies provided to U.S. automakers and chicken producers. We fired the first shot by applying a clause on China's entry into the WTO in 2001 that had not been previously invoked. The clause was regarding protecting existing industries.

How can you begin trading with a trading partner and not expect an existing industry to be impacted?

Let us not forget where these types of protectionist policies may lead to. Today is the 40th birthday of OPEC [Wikipedia]. OPEC's founding was triggered by protectionist quotas by Eisenhower on Venezuelan and Persian Gulf crude.

Simultaneous Tax and Subsidy

So Obama and the Democrats will consider taxes on soda and sugary drinks. This is ironic because we already have the government doing so much wrong on sugar.

Currently we subsidize sugar growers to the tune of $1,200,000,000 ($1.2B) a year. I wonder if the beneficiaries of this subsidy even number in the thousands? We also have import quotas and tariffs on sugar which limit foreign supplies of sugar to U.S. consumers - reducing supply and raising prices.

It gets worse. We subsidize the growing of corn which, in turn, makes corn syrup a more attractive option to food producers. Wouldn't it be nice if we simplified all of this. Forget the tax, stop the corn and sugar subsidies and remove import quotas. Now isn't life simpler.

The Immortalized Peter Stark

Congressman Peter Stark:

The more debt we owe, the wealthier we are...

This helps explain some of the reason the federal deficit is growing so rapidly.

Watch the entire episode here: