Tariff Targets

Tariffs usually start at the behest of an embattled industry that depends on exports, or is being undercut by foreign countries subsidizing their industries and dumping their commodities. Tariff promoting industries are those who are otherwise losing sales because of low price foreign competition. These embattled industries usually own their own legislators and employ lobbyists.

There are industries associated with the cultures of many countries.  The French and Italians will fight for their market share in wine.  The Germans recognize the economic significance of their auto manufacturing industries. Germans promote their beer and their bread and bakery goods by restricting these to local, privately owned family bakeries and breweries. The Japanese recognize the popularity of their automobiles and they value quality, reliability and practical innovation and have traditionally used government subsidies to fund their automotive innovations. Oil dependent countries rely on their oil sales and their citizens realize their dependence on these oil sales. Countries with scenic or historic sites promote their tourism and each enlists their tourist-supporting components like restaurants, hotels and main attractions.  Every country has “products” that are a source of national pride. Voters will back government subsidies for popular industries, especially if they are significant wealth creators in their economies.

When these special interest industries dominate their legislatures, unnecessarily excessive tariffs become permanent fixtures and create unnecessary barriers. A case in point is Germany’s 25% import tariff on US cars when the US import tariff on German cars is 2.5%. In addition, Germany has a 20% VAT tax imposed on imports. Germany’s import tax on US cars is actually 45%. Germans prefer German cars and US cars really pose no threat. The German auto industries need to rethink this 25% tariff. The bigger threat is China with a $5000 Jiangnan TT.

Singapore has had a 100% import tax on cars and has a list of requirements. They don’t want cars and don’t believe they are necessary. The land area of Singapore is 278 square miles.

When Trump mentioned tariffs and trade deficits during the 2016 campaign, it was a wake-up call to get other countries to consider their own tariff boxes. I started looking at imports and exports by country. The foreign countries started to look at their own tariffs back in 2016. China already had plans to decrease their imports by increasing their own production of commodities and so did everybody else.

The economy in 2016 was instructed by the slow-down in the “global market” and the instinct for self-protection. Over the past 2 years, these countries are ready to negotiate and know precisely what they want to do. They are actually moving on Trump’s advice that they join him in putting their own countries first. It’s a very healthy change for all of us.

Also in 2016, we realized that the US could become major exporters of energy and knew that removing the barriers to US production of energy commodities like oil and natural gas and coal was necessary. We also knew that global warming was a hoax and the UN narrative was a dangerous fantasy.

https://smartexpat.com/sg/singapore/how-to-guides/transport/driving/importing-a-vehicle

Countries will protect their manufacturing base and will want the goods they consume to be produced in their own country. The foreign auto plants that are located in their countries are not subject to tariffs, because the employees producing these cars are their own citizens. All countries want manufacturing jobs and want to produce all the goods they consume if they can, especially food.

Imports exist when foreign-made products are in demand, but the volume is not yet sufficient to build an in-country plant to build these products for a country. Imports require shipping products from country to country.

A big impediment to imports is the VAT tax.  It’s a national sales tax that most other countries have adopted. The VAT tax acts like an additional tariff and it is permanently cemented into these economies. The VAT tax is the elephant in the room. Governments won’t eliminate the VAT, because it is a big source of revenue. It raises the cost of living in countries where wages are low and it’s not a good deal for the citizens. Continual adjustments are made on what is taxed and how much it is taxed.  It’s a political football, gets messy quickly and stays messy. The rich like it because it’s not an income tax.

Norb Leahy, Dunwoody GA Tea Party Leader