What is in this article?:
- Economists watch depreciating U.S. dollar, ag exports
- China raises interest rates
- Tariffs may hurt
- Trade war possible
- China raising interest rates
- Beware of tariffs
- Currency exchange threatens ag exports
China raises interest rates
Tuesday, China announced that it will raise interest rates in order to try and reduce the effects of inflation and avoid the house price bubble experienced by many other countries. The higher rates put upward pressure on China’s currency, but the government appears to have intervened in the market to mitigate currency appreciation.
The G-20 Summit, scheduled for Oct. 21-23 in South Korea, will try to "identify and prioritize" the most pressing economic issues, one of which is currency manipulation, Rosson said.
"The danger we face is getting into a trade war in which countries retaliate against trading partners who devalue their currencies by implementing higher tariffs or some trade restriction." The U.S. House of Representatives passed a bill to do just that in late September.
Rosson noted this happened during the 1930s. The Smoot-Hawley Tariff or the Tariff Act of 1930 raised tariffs on 20,000 imports to record levels. Many economic experts believe that the Smoot-Hawley Tariff contributed to the severity of the economic crisis of the Great Depression, reducing world trade and raising costs to consumers, thereby lowering standards of living worldwide, Rosson said.