Submitted by Taps Coogan on the 26th of March 2018 to The Sounding Line.
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Headlines around the world are proclaiming that the US has started an global trade war by applying tariffs on steel and aluminum imports and by applying roughly $60 billion of tariffs on Chinese imports in retaliation for rampant Chinese technology theft. In light of this, in the recent article ‘What the US Exports to China,’ we noted that US import tariffs are actually less than half of China’s and many times lower than the world average. Reader ‘Tom’ commented:
“Since China’s tariffs were already double the US, and the world average is triple the US, isn’t it a bit disingenuous for anyone to claim the US is “starting” a trade war? The solution to this is to shine a bright light on EVERYONE’S tariff practices, and the third graph in this article, short as it is on details, is as close as I’ve seen to the truth in any article since Trump’s steel and aluminum tariffs were announced.”
Updated and expanded, the chart below shows the weighted average import tariff applied by countries around the world as well as the numerical average of all reporting countries in the world.
Weighted average import tariffs in the US are less than half of those in China, less than a third of the world average, and nearly a quarter of those in India.
To suggest that the US is starting a trade war with China is, as reader Tom put it, ‘a bit disingenuous.’ There is a trade war between the US and China, and it has been going on for decades. It is a result of China’s tariffs being twice as high as America’s and it has driven China’s trade imbalance with the US to ludicrous proportions. For every dollar the US exports to China, China exports three to the US and this doesn’t includes the fact that China steals hundreds of billions of dollars of intellectual property and technology from the US every year.
If China, and the majority of other countries in the world, wish to avoid the US finally retaliating in the trade war that it has been losing horribly for decades, they might want to consider lowering their import tariffs to the same level as in the US. Blaming the world’s largest importer for starting a trade war, a country whose import tariffs are three times lower than the world average, is about as disingenuous as it gets.
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Tariffs are one of the smallest barriers to trade. For most countries, such as China, Japan, Korea etc. non-tariff trade barriers are a much larger hurdle. Thousands of companies have tried to overcome some of the arcane non-tariff trade barriers of the mercantilists and have failed. Rules, regulations, standards, red-tape, partnership requirements, inspections, and unwritten hurdles stymie the best intentioned exporters.
For many categories of imports and for many countries tariffs are a big factor. Agreed that in many many instances they are not the biggest. I would venture that the countries with the higher tariffs are more likely to have more non-tariff barriers
My introduction to the category of “non-tariff barriers” came in an article I read 30 years ago that spoke of Japan’s way of keeping out foreign cars: paint jobs were required to be perfect, so they had “inspectors” go over every imported car with a magnifying glass looking for flaws. They could find so many flaws that even a Mercedes Benz ended up needing an entirely new paint job before it could be sold in Japan.
Taps Coogan, thanks for bring some facts to this news story. Everyone needs to see who charges what in the world of tariffs before they go spouting off about the US starting a trade war.
Thanks for the comments. Agreed
So basically the author is saying we need to be more like Nigeria, Pakistan or even China?
Personally I would prefer to live in the countries on the right. I think most poor and middle class would agree with me.
No exactly the opposite. Nigeria, Pakistan and China should look more like the US, Europe, Canada, or Japan if they want to avoid a trade war
I am good with all countries starting free trade. We benefit from foreign aid from China “dumping” steel.
How is us duplicating China going to hurt them more than what they are already doing?
Thanks for the comments. I discussed in more detail here (https://thesoundingline.com/dissecting-us-trade-part-iv-free-trade/), but despite the bad press, the US has seen its trade deficits improve with most of its free trade partners since signing an agreement. So IMO, I agree that mutually lowering tariffs is usually a good thing. If $60 billion in tariffs and some hard talk is what it takes to ultimately get China (or any one else that’s watching) to reduce its trade barriers to the US, it is in everyone’s interest. Nothing else has worked and there has to be a penalty for unfair trade practices or… Read more »
The trade war and tariffs is an interesting subject for UK and Brexit. I think the remain side who are arguing that trade and trade deals post-Brexit from the EU will cause a large loss for the UK economy. I think the opposite is more the case. Trump wants fair reciprocal trade. The tariffs being imposed are equalising not punishment for US markets. Moving from a surplus economy to a debt driven deficit economy in the 70’s has driven the US economy onto the rocks, and sucked capital out the world into Wall Street. If the UK approaches Trump with… Read more »
I agree with you on the trade points. the US – UK trade is already quite well balanced and I think the likelihood of a mutually beneficial deal being reached is pretty high
Tariffs and non-tariff barriers are only part of the puzzle. When we talk of “Chinese exports”, who is it that is actually exporting goods from China? In many cases, exports from China arriving in the USA and Europe are made in factories owned and operated by US-based multinational corporations. About 92% of the goods in WalMart are made in China, but many bear American brand names – try finding a flashlight, a dishpan, a shirt, or a car part made in the USA now. Under NAFTA, GATT, and WTO, which were promoted by US business leaders, US corporations were allowed… Read more »