Trade War Watch 20: China Slaps Tariffs On American-Built Large Cars And SUVs
When we last checked in on t he low-level trade war between China and the US, which was sparked by President Obama’s 35% tariff on Chinese tires, the Chinese government had ruled that American large cars and SUVs were being “dumped” on the Chinese market, but wasn’t doing anything about it. Now, Reuters reports that China is doing something about it, namely saying that it plans to impose tariffs of up to 22% on imports of American-built large cars and SUVs. And the “up to” is key: GM and Chrysler are being hit hardest ( unsurprisingly), while American-made BMW, Mercedes and Acuras are receiving considerably lower tariffs.
Still, China only imports $1.1b worth of vehicles in this category, whereas the US imported some $1.8b worth of Chinese tires prior to the Obama tariffs. Like most of the news around Chinese-American relations, this is more saber-rattling than substance. But with economic conditions still shaky in the US, and a Presidential election getting into full swing, small spats can escalate into larger confrontations. And with China surpassing the US as the largest market for cars in the world, it’s probably no coincidence that this simmering conflict largely involves cars and car-related products.
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The site has been sorely missing these type of pieces over the last week. Ed don't go!
The West is already finished. All that is left is for the curtain to drop. Any serious debate about trade policies with Asian countries gets drowned out by the lobbyists and Fifth Columnists that live on THIS side of the Pacific but whose allegiance is still on the OTHER side. In the 1950s and '60s, Japan pioneered the way. Korea gift wrapped it. Now China is sending it back, C.O.D. The next 20 years are going to be very, very interesting. Each President that steps up after the next election is going to have to put Asian trade at the very top of their priority list. (Canada doesn't count because even our Conservative Prime Minister is too busy kissing up to the Chinese, figuring it will act as a counterbalance to American economic influence over the tundra. Ha, just wait until the Chinese build an oil rig off Baffin Island, then see who Ottawa runs crying to! (Lucky for Obama that the northern aboriginals will keep that pesky western pipeline tied up in the courts until the tarsands dry up, otherwise Alberta oil will end up in Beijing, not Houston.) Those with agendas and axes to grind will try to confuse trade issues, but in the matter with China in particular, there really are only 2 points that matter: In 2001, the United States had a trade deficit with China to the tune of $83B. In 2010, it was pegged at $273B. This not only represents a mass exodus of U.S. currency out of the country, millions of jobs and a lot of technology went with it. (Or are you not reading this post on a Made in China LCD screen, and typing your well reasoned, witty rebuttal on your Made in Korea keyboard, powered by your Made in China PC/Mac/notebook? The other material issue is the status of the U.S. current account. which is not pretty. The current account is really a more accurate way of measuring how a country's economy stacks up against its peers. While China enjoys a $305B SURPLUS with the world (mostly the U.S, BTW), the United States is running a current account DEFICIT of $470B, give or take a few Wall Street bailouts. Although trade wars can be nasty, and there undoubtedly would be short term pain, looking at these sobering figures - just who is benefiting from this so-called 'trade?' It's only trade if your customer wants to buy something from YOU. North America has very little China wants, other than perhaps land and resources, but for now they are content to buy up South America, East Africa and Iceland (apparently.) If China wants a trade war, I say Bring It! I am sick to death of replacing 30 year old Made in North America appliances that were hand-me-downs from my parents, with Made in China crap that self destructs after 3-5 years. A $30 blender at Wal-Mart is no deal if you have to buy THREE of them! My fellow countrymen, who are snapping up Kias and Hyundais like crazy, should not be so smug, either. Canada has gone from a net trade exporter (for, like, forever) to 8 or 9 consecutive quarters of negative current account balances, thanks largely to Canadian's penchant for Korean vehicles. (Not surprisingly, the transport sector of Canada's trade sheet has gone sharply into the negative over the same time period.) We Canadians are vying with Great Britain for a race to join America near the bottom of the current account losers. Ours is flying passed $50B in the red! It is a sign of the times when I was browsing through a huge Indigo books store downtown and while browsing the languages section (still looking for a 'fun' Portuguese/English computer game, ha ha) I stood in stunned silence as I noticed a plethora of Mandararin/Cantonese primers on the shelf. No Portugese, though. Interesting, indeed.
I am not surprised by this, and I bet the US tries to fight it too. The problem with the US tax on tires is that the cheap tires were made in China and the good tires were made in the US. All this has done so far is drive up the cost of all tires. We may have stabilized the jobs in this industry in the US, but we did it at a very large cost to buyers.
From January through October of this year, the US bought 245 Billion dollars more worth of goods from China than China bought from the US. http://www.census.gov/foreign-trade/balance/c5700.html Yeah, the US is really being unfair to China ?????