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It might interest you to know the sort of restrictions China has been placing on Tesla. >[Musk] said China puts a 25 percent import duty on American cars, whil

It might interest you to know the sort of restrictions China has been placing on Tesla. >[Musk] said China puts a 25 percent import duty on American cars, while the U.S. only does 2.5 percent for Chinese cars. He added that no American car company is "allowed to own even 50% of their own factory" in the Asian country, but China's auto firms can own their companies in the U.S. https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-on-trade-with-china-citing-25-percent-import-duty-on-american-cars.html https://www.cnbc.com/2018/03/08/elon-musk-sides-with-trump-o...

panpanna 7y ago
Well, how much does US tax european cars? Agree about the 49% thing, and it's not limited to car factories.
- coolspot 7y ago
  > Currently, vehicles shipped from Europe to the US face a low 2.5% tariff. Meanwhile, cars built in America face a 10% tariff when they're shipped to the European Union. https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-germany-japan-toyota-volkswagen/index.html https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-ge...
  - AstralStorm 7y ago
    Most of this tax is bypassed by exporting cars as parts and assembly in EU though, for American brands...
    - panpanna 7y ago
      Is that allowed by EU? US have several laws to protect against just that.
hangonhn 7y ago
It's not just car companies but foreigners cannot own the majority of ANY company. I can understand why China did this because they don't want to end up like many of the developing countries where most of the economic engines of their country are owned by foreigners. You see this happening in the "banana republics" of the world. It also has the benefit of implicitly forcing technological transfer when it is coupled with high tariffs on imports. Foreign companies end up "partnering" with locals to avoid the tariffs but the joint company is ultimately Chinese majority owned. It's hard to argue that these policies have not benefited the Chinese or at least prevent some of the downsides of economic liberalization and "free" trade. With all that in mind, however, other countries would be fools to allow this sort of economic asymmetry to continue. Especially at this point, when China is the second largest economy (and largest when adjusted by PPP), China doesn't need this kind of protection and is simply not playing fair. I don't know if tariffs are the best way of leveling the playing field but some sort of rebalancing and leveling of the playing field must happen because otherwise it is simply a rigged game. There is even a very good argument that can be made that direct, unfettered foreign investment now would benefit China given its large consumer base with money to spend. Otherwise, the Chinese consumer is simply indirectly subsidizing Chinese corporations who made not have to compete as hard because of these protections.
- zhte415 7y ago
  > foreigners cannot own the majority of ANY company. This is incorrect, and has not been the case for a very long time, please don't spread FUD. Wholly Owned Foreign Enterprise https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterprise https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterpris...
  - hangonhn 7y ago
    Except you left out the really important restriction that they cannot directly sell to domestic Chinese market. So they're still subject to import tariffs. In fact there's a whole industry of consultants who specializes in helping these companies "export and import" their goods back to China. I guess they may save on the shipping costs and employ cheaper Chinese labor. But the whole point of companies opening factories in China is to be able to sell to the huge Chinese consumer market without being hit by tariffs.

panpanna 7y ago

Well, how much does US tax european cars? Agree about the 49% thing, and it's not limited to car factories.

coolspot 7y ago
> Currently, vehicles shipped from Europe to the US face a low 2.5% tariff. Meanwhile, cars built in America face a 10% tariff when they're shipped to the European Union. https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-germany-japan-toyota-volkswagen/index.html https://money.cnn.com/2018/05/24/news/car-auto-tariffs-us-ge...
- AstralStorm 7y ago
  Most of this tax is bypassed by exporting cars as parts and assembly in EU though, for American brands...
  - panpanna 7y ago
    Is that allowed by EU? US have several laws to protect against just that.

hangonhn 7y ago

It's not just car companies but foreigners cannot own the majority of ANY company. I can understand why China did this because they don't want to end up like many of the developing countries where most of the economic engines of their country are owned by foreigners. You see this happening in the "banana republics" of the world. It also has the benefit of implicitly forcing technological transfer when it is coupled with high tariffs on imports. Foreign companies end up "partnering" with locals to avoid the tariffs but the joint company is ultimately Chinese majority owned. It's hard to argue that these policies have not benefited the Chinese or at least prevent some of the downsides of economic liberalization and "free" trade. With all that in mind, however, other countries would be fools to allow this sort of economic asymmetry to continue. Especially at this point, when China is the second largest economy (and largest when adjusted by PPP), China doesn't need this kind of protection and is simply not playing fair. I don't know if tariffs are the best way of leveling the playing field but some sort of rebalancing and leveling of the playing field must happen because otherwise it is simply a rigged game. There is even a very good argument that can be made that direct, unfettered foreign investment now would benefit China given its large consumer base with money to spend. Otherwise, the Chinese consumer is simply indirectly subsidizing Chinese corporations who made not have to compete as hard because of these protections.

zhte415 7y ago
> foreigners cannot own the majority of ANY company. This is incorrect, and has not been the case for a very long time, please don't spread FUD. Wholly Owned Foreign Enterprise https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterprise https://en.wikipedia.org/wiki/Wholly_Foreign-Owned_Enterpris...
- hangonhn 7y ago
  Except you left out the really important restriction that they cannot directly sell to domestic Chinese market. So they're still subject to import tariffs. In fact there's a whole industry of consultants who specializes in helping these companies "export and import" their goods back to China. I guess they may save on the shipping costs and employ cheaper Chinese labor. But the whole point of companies opening factories in China is to be able to sell to the huge Chinese consumer market without being hit by tariffs.