Trade Barriers U.S. Exporters Face And The Wizard Of Oz

Lest American’s doubt that the playing field for international trade is fair they need look no further than our allies – the ones politicians say Trump’s new tariffs shouldn’t apply to. In a moment reminiscent of when Dorothy looked behind the curtain in the Wizard of Oz and found he was a sham, the CEO of the world’s largest automobile company Volkswagen recently uncomfortably questioned the wide disparity between import duties imposed on U.S. cars (10 percent) headed to the Europe versus what the U.S. imposes on German cars (2.5 percent). And U.S. made pickup trucks and work vans face 25 percent tariffs! Even while this unexpectedly candid German executive was stating the obvious, the European Union continued rattling its saber and threatened retaliatory duties on U.S. goods to punish America for imposing “unfair” tariffs on steel and aluminum.

The United States has been losing on international trade issues to our competitors for years. To most Americans this is obvious and undoubtedly contributed to Trump’s election. In all but a handful of sectors primarily associated with either Defense or the Internet (whether it be autos, information technology, aviation, semiconductors, electronics, etc., etc., etc.) American business, specifically manufacturing, has systematically lost market share to overseas competition and American workers are worse off in relative terms. Analysts frequently point to the obvious failures of Detroit and the dramatic decline in the domestic auto industry, but are American business executives incompetent in almost every other business sector that competes on the international playing field?

Of course, tariffs and duties are only part of the problem. Non-tariff barriers such as quotas, local content requirements, labeling, inspections, regulatory issues are more difficult to detect and stop than the obvious numerical barriers imposed using taxes and duties but are nonetheless significant barriers to companies wishing to base their operations in America and sell overseas. For example, when countries impose data restrictions (most have) that require information to be stored outside the U.S. that impacts the decisions of where those multibillion dollar data centers are built. Or when companies are forced into joint ventures in order to enter a market where their technologies are transferred and then stolen as has been well documented in China. Because of their insidious nature, non-tariff barriers have become...Read More HERE