US vs China: the negotiating firestorm


Photo courtesy of Creative Commons

Anish Rao

For far too long America has fallen victim to China’s bad practices, whether it be unemployment from offshoring, product dumping, currency manipulation or even intellectual property theft. After many years of these abuses, there has been little punishment from the World Trade Organization (WTO) or the U.S.

Previous presidents have tried time after time to act with China (TPP, Failure to Enforce WTO trade laws, 301 Petitions), but they have all been short lived and caused our trade deficits to grow larger.

As of  2017, our trade deficit with China stood at a staggering $375.2 billion. This number grows bigger and bigger every year as we continue increasing our imports from China. Just about every product that is in the U.S. was manufactured in China, even if it was assembled or made in America, most of the plastic or other parts inevitably came from China. For example, Ford Motor Company’s Mustang is assembled in Michigan, but its mufflers and other parts can originate from a variety of places including China.

Let’s discuss exports from the United States to the People’s Republic. To get a product into China requires a gruesome process of customs checks by the different government agencies. Not to mention the flat 17 percent Value Added Tax (VAT) that is slapped on the retail value of every product exported into China. This means that on top of the transportation costs, a product like U.S. beef would be subject to a VAT tax, raising the consumer cost of the product even higher. For the U.S., this is much different. In some cases there is just a flat three percent tariff.

I believe this trade war talk is just that, talk. The threats of tariffs are being used as they should be to intimidate China into playing by the rules. Yes, they may retaliate, which is well within their rights. However, if you look at the whole picture the U.S. is getting cheated by China, and it’s about time the U.S. tried to fix the problems.