Monday, September 14, 2009

Tires up, chicken down (GT, TSN)

AlphaNinja - Well what a nice little trade war we've got here!

On Friday, President Obama signed an order raising the import tariff's on Chinese tires from 4% to 35%, in an attempt to protect US jobs. China responded on Sunday:

"China’s commerce ministry announced Sunday that it would investigate “certain imported automotive products and certain imported chicken meat products originating from the United States” to determine if they were being subsidized or “dumped” below cost in the Chinese market. A finding of subsidies or dumping would allow China to impose tariffs on these imports."

As a result, today we have US tire makers Goodyear (GT) and Cooper (CTB) up, while poultry producer Tyson (TSN) is down. The stocks are likely overreacting, as disputes such as these are usually resolved quietly after the initial headlines.

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