Trump's shockingly wise strategy on Chinese cars
"It sounds like President Trump is about to pick a trade fight with China over cars.
Axios reported that when he meets with Chinese President Xi Jinping next month, Trump is likely to raise a stink over how American automobile exports to China are treated compared to Chinese imports.
And to be perfectly honest, Trump's demands sound pretty reasonable.
First, the background:
Under World Trade Organization rules, China still qualifies as a developing country.
So it gets to levy higher tariffs on its imports compared to developed countries like America.
Chinese tariffs on manufactured items like cars can be especially high, often as much as 25 percent. Meanwhile, automakers in other countries exporting to the U.S. pay just 2.5 percent.
A Jeep Wrangler manufactured in Ohio, for instance, will cost $40,530 in America — but $71,000 in China.
But there's a second wrinkle:
One thing automakers in other countries — including American companies like Ford, GM, and Chrysler — will do to get around China's tariffs is just build their manufacturing plants in China, then sell directly to the Chinese market.
But Chinese law requires that Chinese companies must have at least a 50 percent ownership stake in any venture within its borders.
...Add it all up, and less than 5 percent of the cars sold in China are imported from other countries..."