The protectionism decision to increase Chinese tire tariff could not only lead us down the road to a scaled-up trade war, but also distort economic growth and ultimately make consumers suffer, A US trade expert said Thursday.

In an interview with Xinhua in Chicago, Marshall P. Eldred, president of a Chicago-based international trading company Golden Hill Foods, said this could potentially have a negative impact on trade relations.

"Every action has a reaction. This could lead to further protectionism on China's part. At the very least, this sort of protectionist policy creates a tense trade environment," he said.

Eldred has been in international trade and distribution for 20 years. His company, Golden Hill Foods, imports spices and other food ingredients from around the world including China.

Eldred believes that trade protectionism in general distorts economic growth by supporting uncompetitive industries. He said, "in this case, the tire tariff will have a negative impact on the auto industry as automakers seek the least expensive alternatives for inputs. Ultimately the US consumers will suffer as they will not have access to the lowest possible price for cars. "

As an importer of food ingredients, Eldred is concerned that this decision may inspire more cases of US producers looking for protection against less expensive imports from China and elsewhere.

Regarding the impact on US consumers, he said: "It's a slippery slope that could lead to big increases in US protectionism. In the end, US consumers will feel it in their wallets when they realize that they can't afford to buy the same quality cars, TVs, appliances, clothing and other consumables. They will certainly let their feelings be known in the ballot box. The end result is volatility both politically and economically."

Eldred suggested that this trade dispute should be addressed and dealt with at the WTO level to prevent escalation into other sectors of the economy.

He further pointed out that in today's interwoven global economy a thorough cost-benefit analysis needs to be conducted to understand what the true "downstream" effects are of punitive tariffs levied on imports to satisfy one interest group or another.

He gave an example of the handful US tire companies operating in China now. "How does this decision affect them? How about rubber futures on the global commodity exchanges? And does this have a significant effect on raw material suppliers to related industries? " he questioned.

Further commenting US-China trade relations, Eldred said, "like it or not, the US and China are partners in dealing with geo-political issues around the world. Our dealings with China on the economic front have an impact on how we work together as partners on issues such as North Korea, Iran and an assortment of regional conflicts. If we are dealing with China in a way that is perceived as completely self-interested, then they will reciprocate in kind with regards to these issues."

Regarding the next step for US President Barrack Obama's administration in international trade issues, Eldred recommended them to push for reopening of the Doha round of world trade talks. He said, "this would show good faith in an effort to address some of the unsolved issues around global trade, particularly with respect to developing markets attempts to gain access to areas of the US economy previously protected."

Being an international trade businessman for about 20 years, Eldred always has the belief that trade among countries is imperative to raising up the quality of life for everyone. He said," without international trade, consumers would be limited to products produced in their own countries. We are an increasingly consumer-driven world economy and thus international trade is increasing in importance."

"As the world continues to globalize, economies will seek the most cost effective inputs to increase the well being of its citizens. Trade wars distort that growth and ultimately consumers suffer," he stressed.

(Xinhua News Agency September 25, 2009)