Page 9 - The South China Business Journal
P. 9
US importers, distributors, and price markups trade was worth about US$650 billion, with US
rather than Chinese manufacturers per se. Apple, exports to China amounting to US$169.8 billion
in particular, leaves a measly US$10 or so value in and Chinese imports at US$478.8 billion, making
China for every US$800 to 1,000 iPhone 8/X they the US goods and services trade deficit with China
make, which is why they are the world’s most US$309 billion.
valuable company – they retain the value and profit.
This means that even if the US
Another example is in the clothing supply chain. imposed tariffs on “US$50 billion”
A pair of jeans from a US brand, designed in the of Chinese imports, that would
US, made in China on German, Japanese, or US affect just over 10 percent of total US
machines from US cotton, and processed into imports. As for China, its targeted
cloth in the US on US or Swiss textile machines, response of US$3 billion of additional
and exported to China. The rivets are made from tariffs on US imports is actually just
Chilean copper on German machines in China. A 1.8 percent of the total. While the
US quality control agent inspects them. The jeans American figure of US$50 billion
are packed into boxes made from recycled US paper would certainly have an impact, it
waste exported to China (that reduces US landfill remains to be seen if it will actually
pollution) on machines that come from Germany. be carried out. In fact, that amount
They are then packed into shipping containers would only impact an equivalent of
made in China, Korea, or Vietnam, owned by a US 0.42 percent to China’s 2017 GDP.
leasing firm, funded by US investors, then hauled to
port by Japanese, US, or Swedish trucks on trailers That’s hardly a punishment.
made in Korea.
There are other issues. China’s tariff response
They are shipped on a Chinese or Korean built has been measured and has hit back at exactly the
ship owned by a Japanese, Chinese, Taiwanese, or same voters Trump is eager to protect. Rather than
European shipping company, with a Filipino crew swinging an axe at over 1,300 different products,
and European officers. A US Company insures them China has taken a measured response, designed
and the whole process is financed by a US trade to deliberately hurt Trump’s political base. That
bank. They are unloaded at a US port by American US$3 billion of imposed tariffs included US pork
dockworkers, American customs and clearing exports. The American pork industry sent US$1.1
agents inspect them, and American security billion in products to China last year, making it the
guards protect them. US import taxes are paid, if third largest market for US pork. In total, American
applicable. They are loaded onto a US built tractor- farmers shipped about US$20 billion of goods to
trailer and delivered to a distribution facility, China in 2017. A large part of Trumps voting base?
financed or leased from US bank, employing American farmers. They are not very happy right
US workers. They are advertised on US owned now. In fact, forty-five US trade associationshave
TV, radio, and billboards (and online by the US written to Mr. Trump opposing the tariffs. Only
dominated internet) using services from a US ad three support them.
agency and artists. They are further distributed to
the retail outlet or sold on the internet, paid for In short, the amount of additional tariffs China
by a US owned credit card company or bank, and has imposed upon the United States equates to just
finally are delivered to the customer. When they 0.4 percent of the total trade volume. For a trade
are worn out, they may be reprocessed into cotton war, that’s pretty lame. And as for China, they’ve
waste products, sent back to China, Bangladesh or done a good job in educating an Apprentice. The
Vietnam, where the cycle starts again. spat will rumble on a little bit more, but a trade war
was never the intention, and it won’t happen.■
China’s response, among the predictably
enunciated political sabre rattling promising Chris Devonshire-Ellis is the Chairman of Dezan Shira &
hellfire and fury, has been to impose retaliatory Associates, and has written over 20 well-received technical guides
tariffs on US$3 billion of US goods, among them to doing business in China in a career stretching over 25 years.
fresh fruit, nuts, wine, and pork, as well as recycled The firm provides business advisory, legal, tax, and on-going
aluminum and steel pipes. operational support services to foreign investors in China. Please
email china@dezshira.com for further assistance.
According to the Office of the United States
Trade Representative, in 2016 China-US bilateral South China Business Journal 7
rather than Chinese manufacturers per se. Apple, exports to China amounting to US$169.8 billion
in particular, leaves a measly US$10 or so value in and Chinese imports at US$478.8 billion, making
China for every US$800 to 1,000 iPhone 8/X they the US goods and services trade deficit with China
make, which is why they are the world’s most US$309 billion.
valuable company – they retain the value and profit.
This means that even if the US
Another example is in the clothing supply chain. imposed tariffs on “US$50 billion”
A pair of jeans from a US brand, designed in the of Chinese imports, that would
US, made in China on German, Japanese, or US affect just over 10 percent of total US
machines from US cotton, and processed into imports. As for China, its targeted
cloth in the US on US or Swiss textile machines, response of US$3 billion of additional
and exported to China. The rivets are made from tariffs on US imports is actually just
Chilean copper on German machines in China. A 1.8 percent of the total. While the
US quality control agent inspects them. The jeans American figure of US$50 billion
are packed into boxes made from recycled US paper would certainly have an impact, it
waste exported to China (that reduces US landfill remains to be seen if it will actually
pollution) on machines that come from Germany. be carried out. In fact, that amount
They are then packed into shipping containers would only impact an equivalent of
made in China, Korea, or Vietnam, owned by a US 0.42 percent to China’s 2017 GDP.
leasing firm, funded by US investors, then hauled to
port by Japanese, US, or Swedish trucks on trailers That’s hardly a punishment.
made in Korea.
There are other issues. China’s tariff response
They are shipped on a Chinese or Korean built has been measured and has hit back at exactly the
ship owned by a Japanese, Chinese, Taiwanese, or same voters Trump is eager to protect. Rather than
European shipping company, with a Filipino crew swinging an axe at over 1,300 different products,
and European officers. A US Company insures them China has taken a measured response, designed
and the whole process is financed by a US trade to deliberately hurt Trump’s political base. That
bank. They are unloaded at a US port by American US$3 billion of imposed tariffs included US pork
dockworkers, American customs and clearing exports. The American pork industry sent US$1.1
agents inspect them, and American security billion in products to China last year, making it the
guards protect them. US import taxes are paid, if third largest market for US pork. In total, American
applicable. They are loaded onto a US built tractor- farmers shipped about US$20 billion of goods to
trailer and delivered to a distribution facility, China in 2017. A large part of Trumps voting base?
financed or leased from US bank, employing American farmers. They are not very happy right
US workers. They are advertised on US owned now. In fact, forty-five US trade associationshave
TV, radio, and billboards (and online by the US written to Mr. Trump opposing the tariffs. Only
dominated internet) using services from a US ad three support them.
agency and artists. They are further distributed to
the retail outlet or sold on the internet, paid for In short, the amount of additional tariffs China
by a US owned credit card company or bank, and has imposed upon the United States equates to just
finally are delivered to the customer. When they 0.4 percent of the total trade volume. For a trade
are worn out, they may be reprocessed into cotton war, that’s pretty lame. And as for China, they’ve
waste products, sent back to China, Bangladesh or done a good job in educating an Apprentice. The
Vietnam, where the cycle starts again. spat will rumble on a little bit more, but a trade war
was never the intention, and it won’t happen.■
China’s response, among the predictably
enunciated political sabre rattling promising Chris Devonshire-Ellis is the Chairman of Dezan Shira &
hellfire and fury, has been to impose retaliatory Associates, and has written over 20 well-received technical guides
tariffs on US$3 billion of US goods, among them to doing business in China in a career stretching over 25 years.
fresh fruit, nuts, wine, and pork, as well as recycled The firm provides business advisory, legal, tax, and on-going
aluminum and steel pipes. operational support services to foreign investors in China. Please
email china@dezshira.com for further assistance.
According to the Office of the United States
Trade Representative, in 2016 China-US bilateral South China Business Journal 7
