Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Where's the Beef?
The Chinese government has been growing its trade surplus with the United States during the Obama administration, as shown by the blue line being above the red line in the graph below:
It uses a wide variety of techniques to keep out U.S. products. For example, a March 2011 report from the United States International Trade Commission (China's International Trade: Competitive Conditions and Effects Upon U.S. Exports) reports that the Chinese government charges a 13-17% Value-Added Tax on food produced by U.S. farmers, but little to no tax on food produced by Chinese farmers. The following summary appears in Table 4.3 of the report:
And the Chinese government doesn't just rely upon hidden tariffs to keep out U.S. products. It also uses the usual kind of tariffs including tariffs of up to 105.4% on some chicken products and a 35% tariff on U.S. raisins.
But the Chinese don't need tariffs, hidden or otherwise, to keep out U.S. products. They simply keep out U.S. products through regulatory fiat. According to Chinese government statistics, Chinese meat consumption has been growing at a 7.7% per year pace since 1998. But according to the 2010 Report to Congress on China's WTO Compliance published by the United States Trade Office, Chinese purchases of U.S. meat have been stagnant:
The United States could put an end to all of the subterfuges used by the Chinese to keep out American products. All we would need to do is impose a WTO-legal scaled tariff, whose duty rate upon U.S. imports from China would be scaled in order to take in half our bilateral trade deficit as government revenue.
Donald Trump, one of President Obama's possible Republican opponents, has been making Obama's wimpy trade policy an issue. When he campaigns in Iowa he can ask, "Where's the beef?"
Journal of Economic Literature:
Atlantic Economic Journal: