Car and Driver magazine offers a story about a world globalized enough that people in China want the same cars that are offered in the U.S., but not globalized enough that the price is the same in China and the U.S.: “How I Bought Millions of Dollars’ Worth of Luxury Cars and Got Blacklisted by Jaguar Land Rover, Mercedes, and Porsche”
the current base price of a new Range Rover is $88,345 here, but it starts at 1,518,000 yuan in China, which is about $240,000.
an enterprising individual can make $10,000 this month buying luxury cars. You need a heartbeat, a driver’s license, and that’s about it.
See also “How Michelin Is Trying to Reinvent the Wheel: Michelin’s flexible wheel protects a car’s footwear from crumbling roads.” in which we learn that Americans insist on buying tires and wheels that would make sense on smooth European roads (see “U.S. versus German infrastructure spending and results“) and the inevitable current result is purchasing a lot of replacement wheels and tires (but we’re still saving the planet if these are mounted on a Tesla?).
Hmm, never considered pothole-filled roads as a conspiracy by Big Tire.
That is because China routinely levy a few hundred percent in tariffs on US and other exports, while we levy next to nothing on theirs. That is why so called unilateral “free trade” is suicide. That is also in part why we have a 500 billion deficit with China.
That is why we should levy a 50% tariff on all goods from any and all countries with whom we have a trade deficit, increasing by 5% every year with no limits until we reach zero deficits or a surplus with the said nation. For countries with whom we have a surplus, tariffs can come down by 5% every year until we have a neutral trade balance. We can have free trade with zero tariffs, but only with countries who buys from us as much as they sell to us. Yes, I know that is completely against WTO rules, which is why we should withdraw from the WTO.
The objective of trade policy should NEVER be to maximize trade volume, minimize barriers or lower consumer goods prices. The objective of trade policy should be to generate a PROFIT — ie. a surplus — for the country. Everything else is simply expending our accumulated wealth, depleting our industries and borrowing on our children for a few decades worth of cheap stuff at Target or Walmart. FREE TRADE = SUICIDE by slow poisoning for developed nations for the benefit of the 3rd world. UNFAIR TRADE = SUICIDE via a bullet to the head. That we can remain a Superpower by buying everything from abroad and defaulting to a “services” economy where we peddle foreign goods and deliver pizzas to one another is ludicrous. The multinational corporations and their congressional cronies don’t care about trade imbalances. They don’t care about the fleecing of America as long as they are they ones facilitating the process and profiting from it. Wall Street globalists don’t care about that either as long as they can buy and sell shares of companies who participate benefit from the outflow of wealth from one country to another. But, YOU should care. AMERICA as a country should care.
MERCANTILISM, TARIFFS and SURPLUSES are to only way to attain and retain the wealth of nations.
Maybe my math is sketchy but $240,000 – $88,345 is over $150,000. Couldn’t an even more enterprising individual make somewhat more than $10,000?
@dwight I enjoy your posts, but please consider a different perspective regarding tariffs.
Tariffs simply make things more expensive to Americans. The Chinese can happily consume what they make and we cannot afford.
Peter Schiff on the effects of Trump’s tariffs:
@GermanL Tariffs simply keeps wealth from flowing from one country to another. Things may become more expensive, but every cent spent on domestic goods create domestic jobs, domestic profits and domestic industrial ecosystem. Manufacturing workers get paid, they spend their paychecks, companies buy equipment, traffic prompts infrastructure construction, etc. Every cent spent on imports sends American wealth to China (or elsewhere), develop their economy while draining our coffers. Left to its own devices this outflow will no end until China is richer than we are (or at least until the wealth of nations equalize). Why will want that? I am an AMERICAN. I am not a social justice warrior for planet Earth.
A country like the USA – with a lot of land, resources, technology and people – can make everything that we need and want. However, for many things it is cheaper to buy from other countries than to make it ourselves. Forget all the bullshit on absolute and comparative advantages you learn in economics class. They are bullshit because goods are not priced in man-hours, they are priced in dollars. American workers get paid more and we have costly social and environmental standards. It will always cost less for the USA to buy rather than to make most things as long as there are countries in the world where workers make peanuts and environmental concerns are laughed at. Well, sooner or later you run out of money to pay other countries for their cheap labor. Sooner or latter you end up with no industry, no wealth, no infrastructure, no defense, and nothing other than memories of better times.
A country like North Korea or Cambodia will benefit from Free Trade. They have all the cheap labor and can export to prosperity. Affluent and developed countries like the USA should adopt MERCANTILISM. As far as trade is concerned, we should at least try to import no more than we export. It doesn’t matter if total trade volume is lower. This is not good for equalizing wealth and utility across the world, but I have ZERO interest in that.
YES TO AMERICAN SUPERIORITY. NO TO FREE TRADE.
@GermanL American can absolutely win a trade war.
We buy $505 billion worth of Chinese goods. They but $130 million of ours. Exports make up 7.7% of our GDP, in makes up 17% of China’s GDP. It trade goes to ZERO, who loses? Also, China is dependent on the USA as a market for ~20% of their exports. The USA is not dependent on China for ANYTHING. Beyond the very short term, 99.9% of the low cost manufactured goods that can be sourced from China can be sourced from Vietnam, India, Laos, Cambodia, Indonesia, the Philippines, Guatemala, Mexico, Columbia, Pakistan, you name it. Why do we want to send $505 billion a year to our biggest strategic rival?
Free Trade is so terrible. And, Unfair Trade like we have with China — where they tax our stuff and we don’t tax theirs — treasonously retarded.