Trump’s car tariff tweet distorts truth

Source:Global Times Published: 2018/4/9 23:03:40

After US President Donald Trump softened his trade tone with China on his Twitter account Sunday, he tweeted early Monday local time, "When a car is sent to the United States from China, there is a Tariff to be paid of 2 1/2%. When a car is sent to China from the United States, there is a Tariff to be paid of 25%." He called it a stupid trade that has been going on for years.

Trump has repeatedly used the example of vehicle tariffs. It sounds like China's tariffs on auto imports are indeed much higher than those of the US, which can effectively fool the US citizens. But in fact, Trump is deliberately misleading the public's recognition on the big picture of Sino-US trade.

To begin with, China's current 25-percent tariff on car imports was recognized by the WTO when China joined the organization. China strictly performed the requirements of the WTO to lower its tariff level from 15 percent to 10 percent. In 2010, the figure dropped to 9.8 percent, which over-fulfilled Beijing's promise. Taking the free trade zones into consideration, China's trade-weighted average tariff rate is 4.4 percent, which is close to the level of developed countries.

The US imposes a 2.5-percent tariff on cars but a 25-percent tariff on trucks. In the meantime, China only imposes a 20-percent tariff on trucks. While Washington levies tariffs of up to 30 percent on T-shirt imports, the figure of China is only 15 percent.

It should be noted that the 25-percent tariff was imposed on complete vehicle imported to China - other imported auto parts are taxed only at 10 percent and most US cars that are sold in China are produced in China. In 2017, US cars accounted for around 280,000 imports into China while about 21,000 Chinese vehicles are exported to the US.

The huge disparity reflects the fact that China is the largest developing country. Tariffs have not prevented US automakers from entering and making lucrative profits from the Chinese market. WTO rules on tariffs in developing countries make sense because they help strike a balance between ensuring big corporations make profits and developing countries realize industrialization gradually. The world's leading automakers agreed to build joint-ventures in China from the beginning because this form of cooperation is in line with their interests. Over the years, these companies have established win-win relationships with China, instead of being exploited by China.

Yet Trump deems this is not fair to the US. According to his logic, millions of vehicles that US automakers sell in China annually should all be made in the US, offering jobs to Americans and turning in taxes to the US government. China should only import vehicles from the US without the ability to manufacture its own. If US companies build factories in China, it must be solely owned by US investors. This is fairness to Trump only if China accepts all these conditions. In the high-end manufacturing sector and technology innovation field, Washington wishes that China would set no barrier.

With the development of China's economic growth and strength of science and technology, further opening-up and lowering of tariffs will be the future trend. But how China will do this will be decided based on WTO rules and China's own interests. This is China's sovereignty. Beijing will never listen to the command of Washington.

Posted in: EDITORIAL

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