China's nylon 6 tariff could tie trade relations in knots


In an interesting demonstration of the extreme specificity of international trade, China's Ministry of Commerce recently levied a 30 percent tariff on imports of a specific artificial fiber -- nylon 6 -- from the United States, Russia, the European Union and Taiwan. Monday's announcement was greeted with displeasure by companies that produce the material, including Honeywell (HON) and BASF (BASF).

In some ways, the Chinese tariff on nylon 6 operates as a useful lesson in the dangers of trade restrictions. As the Chinese Ministry of Commerce noted, one of the fiber's major uses is as a material for tire cords. Given the US' recent decision to levy tariffs on cheap Chinese tires, the move to limit imports of nylon 6 seems like a not-so-subtle hint about the interconnectedness of global industry. Effectively, the Chinese seem to be conveying the message that restrictions on the free flow of goods can cut both ways.