Stoctrash, the tariffs China charges on imported goods are way down from what they used to be. I can recall days when duty on imported cars was something like 80%-100%. When they joined the WTO, the duties had to fall and keep falling. Their tariffs are now in line with global norms.
Most developing countries have some sort of protection for their local economies in order to aid development of lagging industries. This is quite typical and normal globally. The Chinese starting with Mao have a history of leveraging their situation in an advantageous manner due to their large population and potential.
Most people don't realize China is one of the few countries that actually taxes their exports. They have a 17% value added tax that used to be completely rebated to exporters after shipment, but now is usually only partially rebated if at all, depending on the commodity. Last year they even went further and started adding taxes over and above the VAT on certain raw materials and steels.
As for US companies doing business there, they are basically treated no different than local businesses. You pay the same tax rate, you operate under the same employment rules, and you need to deal with the local bureaucrats. There are many layers in the bureaucracy, and each wants to make sure they are relevant. Sometimes a foreign company that is locating in a certain parts of China is made to provide some concessions like helping with the access infrastructure costs in order to open up. This is to help the local governments as well as to provide a minor disincentive to just set up a factory, exploit, and export. There are cultural differences that do allow local Chinese companies to have more favorable relations with the local government, but this is pretty typical everywhere in the world.
What a lot of Americans don't realize is how unfair and arbitrary some of the US tariffs are with respect to Chinese commodities. The US method for applying and calculating anti-dumping duties is an international embarrassment. The US is pretty unique amongst developed countries in the way they apply dumping duties. They calculate "fair value" according to what the goods would cost to produce here and apply the difference as a dumping duty. The European method calculates fair value as the cost to produce in the exporting country, which is reasonable for determining dumping. If it costs me $1.00 to produce something in another country, why should importers of that product pay $2.00 dumping duty just because three companies say it costs them $3.00 to make this product in the US? In Europe there would be no dumping duty unless the producing company was selling it for below $1.00.
I believe only three companies are needed to bring an anti-dumping duty investigation on a commodity in the US, and it's not too hard to get a favorable ruling.
The US arbitrary anti-dumping levies are amazing. A factory could produce a widget and export it to the US through two different trading companies. If there's anti-dumping duty on that widget you could have a situation where the initial price paid to import the item is similar, but the anti-dumping duty could be 30% from one trading company and 180% from the other just because of a near arbitrary decision by the ITA. I was actually researching some anti-dumping yesterday and found items from one exporter went from 0.64% to 180% and back to like 34% anti-dumping duty over the course of a couple years with marginal changes in the export price of the item.
In the early history of the United States much of the revenue for the government was attained through tariffs on imported goods. Currently I believe tariffs are less than 1.5% of the US government revenues. If you add in the cost to process these tariffs and duties and the industry and government agencies that exists to do it, I doubt you could find a net benefit to business by having this system of primarily meager levies on imports.
Free trade benefits all. You now can eat grapes from Chile in the winter, shrimp from Chile (but not Vietnam, as their industry was recently destroyed by US anti-dumping duty), produce from Mexico, and Clementines from Spain. Furthermore, I've eaten US beef, salmon, chocolates, and other US foods in China. |
