Trade War With Brazil?

I’ve not been keeping up with the BRIC’s, since the PIIGS have come home to roost. 😉 The FT has the story that there’s a serious chance of a trade war with Brazil over some big commodities and it’ll be interesting to see how this plays out.

Brazil moved on Monday to raise tariffs on a wide range of American goods, potentially igniting a trade war with the US over cotton subsidies after eight years of litigation at the World Trade Organisation.

The decision takes effect next month, starting a 30-day period during which US and Brazilian officials will attempt to negotiate a solution to the dispute.

The articles mentions that Brazil sued the US in the WTO over cotton subsidies and the US lost. Yet another angle with the government trying to take over many different industries.

Trade wars are bad in the best of times. To have one break out in a global decline is an exceptionally bad time. It will be interesting to see whether it comes to pass and how badly this will affect the US. Since the US is really in a bind at the moment, it would be better if the administration would act like an adult and fix the damned subsidies but I won’t hold my breath. May be yet another reason to think the BRIC’s may continue to do well against the dollar?