Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
China raises their 25% tariff on American-made cars
President Hu of China said this week that China is persuing a balanced trade policy. If you believe that one, I've got a bridge in Brooklyn that I want to sell you.
The graph above shows the US trade deficit with China in goods as reported by the Commerce Department on Friday. At $291.8 billion for the twelve months ending in October, it was the highest trade deficit for a 12 month period ever recorded with China.
Meanwhile, the Chinese government is upset that despite its already high 25% tariff upon American-made vehicles, a few American-made cars are still being purchased by Chinese consumers, so they just raised their tariff. The Guardian reports:
Meanwhile, American car companies, knowing that the Chinese government won't let them sell American-made vehicles in China are producing most of their vehicles for the Chinese market in China. As a condition for doing so, the Chinese government requires that they "share" their proprietary technologies with their Chinese competitors.
On September 16, the Wall Street Journal reported (Road Gets Bumpy for GM in China) that the Chinese government was pressuring GM to give away its proprietary electric car technology. At that point GM was refusing. Here's a selection:
Just one week later, on September 22, the NY Times reported (GM to develop electric cars with Chinese automaker) that GM had caved to the Chinese government demand:
Ford may also cave in to the Chinese government demand according to the press release issued by Virginia Senator Jim Webb when he introduced legislation to stop the transfer abroad of technologies developed with U.S. taxpayer dollars. He stated:
If America had a competent president, he would require balanced trade, as permitted by WTO rules. Then American car companies would be able to produce their cars in the United States, where they could protect their proprietary technologies, and still have access to Chinese markets.
Journal of Economic Literature:
Atlantic Economic Journal: