US Corporations dodging Trump’s Tariffs
After Trump’s tariffs, companies with the money and legal know-how sought exemptions, routed imports through other countries, or made small product changes that moved them into a tariff-exempt category.
#China, #Trump, #Tariffs
Authored by Serban V.C. Enache via Hereticus Economicus:
In 1934, the US Congress passed the Foreign Trade Zone Act to allow companies to bring in and store merchandise without tariffs as long as these goods were not meant for domestic consumption. Almost 300 of these Foreign Trade Zones [FTZs] are present in the United States. The United States Customs and Border Protection website provides more information here. Companies faced with the 25 percent tariffs on top of regular duties are channeling funds in legal know-how in order to adapt to the Government’s new trade policy, policy designed to change China’s own commercial and business practices, albeit with no success.
The Trump administration, via its use of tariffs, has tried to accomplish different objectives, one of them being the revitalization of US manufacturing. The effort will take time, years possibly. For countries without tradition in manufacturing, it can take decades. The US can grow this sector both in volume and quality via free trade or protectionism. I’ll explain the former path at the end of the article. But now let’s talk about protectionism. Like I stressed on previous occasions, tariffs alone won’t cut it. They have to be part of a nation-wide reindustrialization plan; this means big state contracts for infrastructure creation using domestic resources [materials, equipment, and labor] and skill development programs. In lack of this comprehensive national scheme, the economic drag from the tariffs is felt in net terms and for a longer time period. The case of FEDCO’s new pump model illustrates this perfectly. When they switched product suppliers from Chinese foundries t ...