China's Coming Reductions in Import Barriers: A Short-Term or Long-Term Change?

We reported yesterday that Europe, in a surprising escalation of global trade wars, announced it would impose solar-panel duties against China in one week, with the terms rapidly deteriorating over the next three months. It took China less than one day to retaliate. What's worse the retaliation is aimed at Europe's already weakest - the PIIGS - by targeting not hard German machinery exports but something far more prosaic: French, Spanish and Italian wine.

As I've, frequently discussed on this blog, politicians and pundits who repeatedly demand that China dramatically appreciate its currency, or that the United States impose tariffs on Chinese imports until they do, are really advocating higher prices for the many American families and businesses that purchase such goods.

China on Saturday reported a sharp slowdown in exports in May compared to the previous month while imports unexpectedly dropped, as the world's second largest economy grapples with slowing growth and sluggish overseas demand. Overseas shipments rose just one percent to $182.8 billion last month, far lower than 14.7 percent recorded in April, customs authorities said in a statement.

SHANGHAI (Reuters) - China plans

U.S. trade policy, hobbled for years by partisan bickering, has been reinvigorated with a new level of ambition and scope. President Barack Obama, considered a trade skeptic when he first came into office in 2008, is now pursuing free trade zones spanning both the Atlantic and the Pacific oceans.  

In a must-read article, the NY Fed studies the prices of Chinese imports into the United States and comes to some very interesting conclusions.  First, the basics: