America gives away our jobs and factories to China with a lopsided de minimis rule promoted by global businesses

Zach Mottl

Zach Mottl, chief alignment officer of Atlas Tool Works and a past chairman of the Technology and Manufacturing Association of Illinois, is a very unhappy American.

Four of his state’s members of the House of Representatives are trying to block the White House effort to lower the “express shipment” measure included in the de minimis rule. This regulation currently allows China to send us goods without any tariffs or customs duties, as long as the value is less than $800.

These anti-American politicians – tools of global businesses – oppose lowering this limit to $200: Cheri Bustos (D), Bradley Schneider (D), Danny Davis (D), Mike Quigley (D) and Never-Trumper Darin LaHood (R).

Mottl said the current deal with China is blatantly unfair:

China’s de minimis level is a mere $8. That means any American company shipping a product to China – valued at more than $8 – must pay a duty. But there’s no reciprocity; a Chinese good priced as high as $799 can enter the U.S. duty-free.

In 2016, Congress increased the de minimis limit from $200 to $800.

That opened the floodgates, allowing companies like Amazon to further incentivize imports, Mottl explained.

My manufacturing company, Atlas Tool Works, has been in operation in Illinois since 1918. We are a textbook example of the kind of domestic American company that has been surviving for years in the face of heavily subsidized imports. And our nearly 80 employees depend on Atlas for their jobs and livelihoods.

Mottl said the current system is being exploited and the $800 limit is being abused to allow a flood of goods entering the United States, often with much higher ticket prices than listed on import documents:

For example, 60 counterfeit Chicago Cubs jerseys were recently seized at O’Hare Airport. The jerseys were listed at a value of only $177. But a Customs official estimated the merchandise would have actually sold for $7,200.

Duties are only charged based on the value of the import. Popular items, such as designer sunglasses may sell here for $500 or more, but their actual price to import from China usually ranges between $7 and $15. That means 100 sunglasses would avoid any import duties ($700 declared), but would retail here for $500 X 100, or $50,000 total.

Also, Congress could better serve America’s manufacturers by passing the U.S.-Mexico-Canada Agreement (USMCA), Mottl said.

The pending deal contains helpful enforcement mechanisms and also directs Canada and Mexico to raise their current de minimis levels.

Matching America’s de minimis levels to those of our trading partners could help to ensure a more level playing field.

Meanwhile, Bustos, LaHood, Schneider, Davis, and Quigley have written to U.S. Trade Representative Robert Lighthizer, explaining that they “strongly oppose any effort … to lower the $800 de minimis threshold” in the U.S.

Their stance is purely pro-business, benefiting huge corporations like Amazon and Walmart, who can use multiple small purchases to avoid the duties our goods face in China. This is not the historic stance of the Democrat Party, which has long supported workers and consumers over retailers and wholesalers.

As Mottl explained:

These representatives are essentially arguing for a lopsided policy that enables Amazon — one of the world’s most profitable companies — to keep importing subsidized, low-cost goods from China at absolutely no cost.

This is doubly egregious considering that Amazon paid zero federal and state taxes in 2018 on more than $11 billion in profits.

Bike supplier and retailer offers similar warning on de minimis rule

de minimis rates in various countries

Congress forces USPS to subsidize mailers in China and gouge Americans nearly six times as much to send the same package

Billions of dollars of goods are imported from China into the United States every week, and very little is exported to that communist monolith from small businesses in our country.

Most of our exports are from giants like: Boeing selling planes, Wall Street hawking financial services, or Hollywood offering pablum movies censored by the Chinese dictator-for-life and his all-seeing minions.

Is our huge trade deficit because entrepreneurs in China are just born smarter, work harder or are more thrifty, patient and all-seeing?

The answer is none of the above.

As usual, the problem is an always supplicant Congress, embracing big business, promoting their monopoly at the expense of the little guy or gal.

Most of us have seen pictures of cargo ships filled with China’s products unloading into our West Coast ports. Shipping containers are relatively inexpensive and cost just as much sailing from China to the U.S., as from the U.S. to China.

A small business can’t afford to fill shipping containers.

Instead, American exporters mail packages, and that’s where folks here get screwed by their own government as well as by China’s import duties and taxes.

Pretend you have a one-pound book worth $30 to mail in China to a customer in the United States. Using their mail, your package will arrive in about seven days at a cost of $7.31.

Suppose the book is damaged? You can mail it back to the sender and get a refund.

However, that means you have to pay the USPS postage – $46.71. If you are not in a hurry you can save money and it will be delivered in about seven weeks at a cost of $24.06 on a slow boat to China.

It’s not fair trade when one party is charged $46.71 and the other gets subsidized to only pay $7.31.

In 2011, Congress ordered the the U.S. Postal Service to make special agreements with the national postal carriers of China and Hong Kong to allow tracking-enabled packages not exceeding 36” or weighing more than 4.4 pounds to be sent to the U.S. at bargain basement rates. This shipping option – the ePacket – has rates so low that it’s cheaper to ship small parcels from China to an American city than it is to mail that same parcel within our country.

USPS subsequently extended the same deal to South Korea and Singapore. The plan was to increase imports into our country and help Asian countries at our expense.

Unlike the United States, China subsidizes its postal system so costs are minimal in that country. At the same time, USPS is subsidizing mail from China to keep prices low for our Far East competitor.

If the huge disparity in mailing costs doesn’t make Americans noncompetitive in the Chinese marketplace, consider the impact of taxes and fees levied by each government.

Let’s compare the approximate cost of shipping a one-pound box of gold-plated jewelry to each country.

Shipping from China to the United States
Item cost : $300
Shipment cost : $8
Total amount: $308

Shipping from United States to China
Item cost : $300
Shipment cost : $46
Customs duty rate @35% = $121
Vat rate @17% = $59
Total amount: $525

A first step in lowering costs for America’s small businesses is to reduce the rate we pay to mail to China and raise the rate we charge them to deliver here. The current imbalance of $8 to $46 to mail the same package is almost 6 to 1 – an unbelievable gift to Chinese exporters.

This change alone will help small business compete, plus impact the nearly $4 billion in so-called “loses” that will be incurred this year by the post office.

Next week: We examine the De Minimis import value threshold, and how some slimy members of Congress want it to continue benefiting China’s exporters and restricting American business.

From Zyklon B to Agent Orange to Roundup – how a corporation affected everyone from Nazi gas chamber victims to farmers today

US planes drop Agent Orange in 1966 – AP

Some call it a marriage made in Hell.

Bayer and Monsanto combined last year, forming a single company that has produced everything from Heroin to Roundup™, and is currently best known for making farmers destroy seeds generated by their own crops.

Keeping farmers in their place is a hallmark of big chemical companies from Dow to DuPont, and Bayer/Monsanto is no exception. Their most recent victory was a Brazil Appeals Court decision that upheld the company’s right to regulate seeds, even those produced by farmers, not the company.

The court’s nine justices unanimously ruled last month that Brazilian farmers cannot save seeds for replanting if the seeds are harvested from Monsanto’s patented Roundup Ready™ soybeans, which are genetically engineered to withstand direct application of the firm’s Roundup herbicide.

In Brazil, Monsanto charges 2% royalties on the sale of its patented soybeans, a controversial industry mandate. The company also charges an additional royalty – 3% of farmers’ sales – when soybeans are planted from saved Roundup Ready seeds.

Monsanto requires United States buyers of its genetically modified seeds to sign special licensing contracts that prevent them from saving seeds. North American farmers, who violate those agreements, have been sued for patent infringement and compelled to pay tens of thousands of dollars in damages.

It seems you can’t beat this company in the courts, despite numerous attempts. Monsanto has won every intellectual property lawsuit that went to trial in the U.S. and Canada from 1997 to 2018

When President Donald Trump talks about intellectual property rights, the Monsanto control of the use of Roundup Ready™ seeds is one example. Other such property rights include brand name drugs and various other corporate patents.

These property rights’ provisions are included in the proposed Mexico/Canada/United States trade deal now in the House of Representatives, where a few honest brokers complain that blindly favoring patents guarantees extremely high prices for consumers.

Trump also wants these property rights enforced in China. That would mean the Chinese could also face the horror of spending $6,000 a year for a tiny pill of Bayer’s Xarelto, a commonly-used blood thinner drug that just had its patent extended in Europe to 2024. That’s expensive, but cheap when compared to drugs for Cystic Fibrosis and HIV that cost hundreds of thousands of dollars a year.*

The Chinese will not buy America’s corporate monopolistic practices. Instead, Trump is offering them more and more soybeans from our farms, mostly grown with Monsanto seeds and protected from insects by Monsanto Roundup™. To keep the farm industry happy he is also using our tax dollars to subsidize these farmers so they can sell cheaply to our greatest global competitor.

Because of the Trump-China Doctrine, which is nearly the same as every President since Richard Nixon, China continues to force America into being a colony in the true British Empire model.

Britain once ruled the world by forcing its colonies to produce raw materials – cotton in America, sugar in the Carribean, silk and rice in Asia, rum in Jamaica. In return, Britain’s factories turned those raw materials into manufactured goods that were sold back to their colonies, who had no production capacity.

A company like Monsanto is relatively immune to trade policy. As the world’s largest seller of seeds, together with Bayer, it has a long history of success, no matter what the political winds brought.

Bayer was founded in 1863. Everyone knows it invented aspirin, but it also sold Heroin in the early 1900s to cure coughing. During World War II, Bayer was part of the IG Farben consortium that produced Zyklon B for Nazi gas chambers.

IG Farben used slave labor in its factories in German concentration camps, including Monowitz (Auschwitz III). By 1943 about half of IG Farben’s 330,000 workforce was either slave labor or conscripts, including 30,000 Auschwitz prisoners.

In her 2000 book, Experiments, Irena Strzelecka, noted:

Helmuth Vetter, an Auschwitz camp physician, SS captain and employee of the Bayer group within IG Farben, conducted medical experiments on inmates at Auschwitz.

In one study of an anesthetic, the company paid RM 170 ($68, or $994 today’s money) per person for the use of 150 female inmates of Auschwitz. A Bayer employee wrote to Rudolf Höss, the Auschwitz commandant:

“The transport of 150 women arrived in good condition. However, we were unable to obtain conclusive results because they died during the experiments. We would kindly request that you send us another group of women to the same number and at the same price.”

Monsanto began as a manufacturer of saccharine in 1901. During the 1940s, it first produced farm chemicals, including herbicide 2,4-D. Combined with another chemical, 2,4-D was used to manufacture the Vietnam War-era Agent Orange. Vietnam, as well as American veterans, have demanded the company pay compensation to victims of the defoliant.

Between 1961 and 1971, the United States military sprayed some 12 million gallons of the poison on more than 30,000 square miles of southern Vietnam. Dioxin, a highly toxic element of Agent Orange, has been linked to major health problems such as birth defects, cancers and other deadly diseases.

Monsanto has argued:

The government set the specifications for making Agent Orange and determined when, where and how it was used. Agent Orange was only produced for, and used by, the government.

In 1976 the company introduced weed killer Roundup. More than 40,000 cancer victims or their families are now suing Monsanto, claiming exposure to the company’s line of Roundup herbicides caused their diseases.

The lawsuits allege that exposure to Monsanto’s herbicides led to plaintiffs developing non-Hodgkin lymphoma, and that while Monsanto knew about the cancer risks, it intentionally did not warn consumers.

Monsanto scientists in the 80s were first to genetically modify a plant cell, and the firm soon began buying other seed companies and initiated field trials of GM seeds.

Eventually, Monsanto developed soybean, corn, cotton and other crops, engineered to be tolerant of Roundup, and denied farmers the right to freely use seeds generated by their own crops on their own land.

This is a link to Bayer/Monsanto current products.

To give credit where it’s due, Friends of the Earth first dubbed the merger a “marriage made in hell”, and said it would simply switch its protests to Bayer so long as it continues Monsanto’s practices.

Bayer factory in Leverkusen, Germany, 2009
* Ten most expensive U.S. drugs based on length of therapy:

  1. Zolgensma – $2,125,000
  2. Luxturna – $850,000
  3. Myalept – $778,314
  4. Folotyn – $745,785
  5. Soliris – $678,392
  6. Blincyto – $641,533
  7. Ravicti – $633,072
  8. Lumizyme – $630,630
  9. Actimmune – $575,540
  10. Takhzyro – $573,820

That 25% U.S.A. import tariff on all pickups and fancy SUVs costs you big money, because it stops foreign competition

Yet another truck ad? We just had one – only five minutes ago.

Do you ever wonder why American auto manufacturers rarely run tv ads for passenger cars, yet flood us with massive commercial schedules for pickups and big SUVs?

Follow the money.

For American vehicle manufacturers, the money is in pickups and other so-called light trucks, like SUVs.

25% tariff kept it out of 1966 USA showrooms

The primary reason: virtually no foreign competition, because of a 25% tariff on imported “light trucks” enacted in 1964, as the response to tariffs placed by France and West Germany on importation of U.S. chicken. In short, the “Chicken Tax.”

The tax requires a pickup truck made in Japan or elsewhere – that should sell here for $30,000 – will be hit with a $7,500 (25%) tariff, and instead cost you $37,500.

Only light trucks made in North America are exempt.

Automakers have enjoyed this industry protection from competition for 55 years, and the tariff is still imposed. By comparison, passenger cars only face a 2.5% tariff.

You can’t compete with a 25% price advantage, so foreign manufacturers don’t send light trucks into America, and companies like Chrysler, GM and Ford have near-monopoly control of the market.

U.S. manufacturers make much more profit selling pickups, and have neglected our car market. Most passenger autos sold in American are made by foreign companies – Toyota, Honda, Hyundai, etc.

For the record, other nations impose a 10% tariff on cars we produce, which is another reason for our automakers not to invest in cars, versus light trucks.

So, what’s the big deal that a few pickup trucks made here are very overpriced?

It’s not a “few” trucks.

In 2018 Americans bought 11,786,069 new light trucks, and only 5,488,181 new passenger cars – proof that you can convince the public to drive trucks instead of cars through heavily advertising them and rarely mentioning autos.

To make things worse for consumers, NAFTA allows Mexico and Canada to build cars and light trucks, and then export them to us with no tariffs. The Japanese pickup that faces a $7,500 tariff can’t compete with a Ford or GM truck built in Mexico.

NAFTA means manufacturers can have the best of both worlds – a 25% tariff advantage on their “competitors”, and an underpaid labor force (minimum wage 59 cents an hour) in Mexico to build these trucks.

Fair trade this isn’t.

Remember those 5,488,181 new passenger cars sold in the U.S. last year? Guess where they came from?

  • Mexican plants from 13 automakers produced 4.2 million cars in 2018, the majority of which were imported by the U.S.
  • Mexico also exports 90 percent of its OEM car parts to the U.S.

It’s no surprise that foreign automakers have moved plants to Mexico to allow tariff-free exporting to the U.S. of both trucks and cars.

These are the 39 new car and truck models currently built in Mexico, and exported with no tariffs to the U.S. (all plant and production data is from Automotive News):

  1. Audi Q5
  2. BMW 3-series
  3. Chevrolet Blazer
  4. Chevrolet Cruze
  5. Chevrolet Equinox
  6. Chevrolet Silverado 1500 Crew Cab
  7. Chevrolet Trax
  8. Dodge Journey
  9. Fiat 500
  10. Ford Fusion
  11. Ford Transit Connect
  12. GMC Sierra 1500 Crew Cab
  13. GMC Terrain (certain models)
  14. Honda Fit
  15. Honda HR-V
  16. Hyundai Accent
  17. Infiniti QX50
  18. Jeep Compass
  19. Kia Forte
  20. Kia Rio
  21. Lincoln MKZ
  22. Mazda 3
  23. Mercedes-Benz A-class
  24. Nissan Frontier (certain models)
  25. Nissan Kicks
  26. Nissan Sentra
  27. Nissan Versa
  28. Nissan Versa Note
  29. Nissan NV200 Cargo
  30. Ram 1500 Regular Cab
  31. Ram 2500/3500/4500/5500
  32. Ram ProMaster
  33. Toyota Tacoma
  34. Toyota Yaris
  35. Volkswagen Beetle
  36. Volkswagen Golf
  37. Volkswagen Golf SportWagen
  38. Volkswagen Jetta
  39. Volkswagen Tiguan

The trend to fewer cars and more trucks on our highways is evident when you compare 2018 to 2017 sales.

 Type 2018 2017 Y-o-Y
Jan.-Dec. Jan.-Dec.
Passenger Cars 5,488,181 6,318,061 -13.10%
Light Trucks-Pickup, SUV 11,786,069 10,912,375 8.00%
Total 17,274,250 17,230,436 0.30%

While nearly all politicians and the U.S. Chamber of Commerce whine about the possibility of President Donald Trump imposing a 5% tariff on Mexico in exchange for more cooperation at the border, not a word on the Chicken Tax.

As usual, the slick characters have found devious ways to trick the system from time to time, avoiding the 25% levy.

For example, Ford – not satisfied with its 25% bonus tariff protection – imported its first generation Transit Connect light trucks as “passenger vehicles” to the U.S. from Turkey. Wikipedia notes that the company:

…immediately stripped and shredded portions of their interiors (e.g., installed rear seats, seat belts) in a warehouse outside Baltimore.

To import vans built in Germany, Mercedes disassembled them and shipped the pieces to South Carolina, where American workers put them back together in a small kit assembly building.” The resulting vehicles emerged as locally-manufactured, free from the tariff.

As you might expect, the new NAFTA set for a vote in Congress this summer, continues to guarantee no tariffs on “light trucks” from Mexico and Canada, while the rest of the world pays 25%.

Bernie Sanders refuses allegiance to corporate CAP and Hillary’s anti-populist team is seething

Corporate-favored candidate Hillary Clinton and senior socialist Senator Bernie Sanders didn’t make peace after Donald Trump’s 2016 victory, and like the mongoose and the snake, their war never seems to end.

Podesta3The former First Lady of Arkansas blasted the former Vermont high school miler with a brutal video (see below) last week, delivered by John Podesta’s Center for American Progress (CAP). The clip, produced by the center’s affiliate, ThinkProgress, mocked Sanders for how his language changed after he sold so many of his books that he became a millionaire.

Podesta is Bill Clinton’s former chief of staff and was Hillary Clinton’s campaign boss in her losing battle for the Presidency. He founded CAP in 2003, and though the organization describes itself as nonpolitical, its directors include not only Podesta, but former Sen. Tom Daschle, known for his tax avoidance of $128,000, and most recently, Stacey Abrams, the self-perceived governor of Georgia.

The other directors of CAP are:

  • Neera Tanden, President, former policy director for both Hillary and Barack Obama
  • Tom Steyer, billionaire hedge fund manager
  • Donald Sussman, founder of New China Capital Management
  • Hansjörg Wyss, billionaire founder of a medical device manufacturer
  • Glenn Hutchins, billionaire with The Blackstone Group
  • Kristin Mugford,  former Senior Director of Mitt Romney’s Bain Capital

 

Besides the Clinton connection, why is CAP going after Sanders?

Could it be that one director, a medical device manufacturer, would be unhappy with Sanders’ Medicare for All?

In a single-payer system, the government can use its leverage to negotiate more reasonable prices for basic medical services, Sanders explained.

It also serves to incentivize doctors that choose to practice in fields where help is needed the most – primary care, family medicine, and pediatrics. An expanded system has the added benefit of giving Medicare more negotiating power when purchasing pharmaceuticals and medical devices

Or the founder of New China Capital doesn’t like a senator, who voted against Permanent Normal Trade Relations (PNTR) with China?

I voted against NAFTA, CAFTA, PNTR with China. I think they have been a disaster for the American worker. A lot of corporations that shut down here move abroad. Working people understand that after NAFTA, CAFTA, PNTR with China we have lost millions of decent-paying jobs, Sanders said.

Since 2001, 60,000 factories in America have been shut down. We’re in a race to the bottom, where our wages are going down (to). Is all of that attributable to trade? No. Is a lot of it? Yes.

TPP was written by corporate America and the pharmaceutical industry and Wall Street. That’s what this trade agreement is about. I do not want American workers competing against people in Vietnam, who make 56 cents an hour for a minimum wage.

And probably none of CAP’s hedge fund billionaires were impressed, when Bernie urged:

  • Progressive income taxes on the richest Americans.
  • Fixing the estate tax so mega-rich families pay their fair share.
  • Taxing corporations more fairly, including addressing tax havens.
  • Taxing Wall Street speculation.

The CAP/ThinkProgress video is only the most recent shot against Sanders. It followed a recent hit piece By Jessica Goldstein, who used to work for Jeff Bezo’s Washington Post. The richest person in the world, Bezos is often attacked by Sanders for his grotesque wealth and power.

The Vermont senator obscures his wealth to relate to the 99%, while Trump exaggerates his worth to feign a station above his own, Goldstein said.

Trump is “a poor person’s idea of a rich person.” And now, Sanders is altering his language to edit himself out of the line of fire. In recent weeks, his chorus of “millionaires and billionaires” has been amended to take aim only at “billionaires.”

Sanders sent a letter Saturday to CAP, accusing the organization of “using its resources to smear” him and other progressive presidential candidates.

Center for American Progress leader Neera Tanden repeatedly calls for unity while simultaneously maligning my staff and supporters and belittling progressive ideas, he wrote. I worry that the corporate money CAP is receiving is inordinately and inappropriately influencing the role it is playing in the progressive movement.

The Nation magazine said past donors to the CAP Business Alliance included Comcast, Walmart, General Motors, Pacific Gas and Electric, General Electric, Boeing and Lockheed.

I and other Democratic candidates are running campaigns based on principles and ideas and not engaging in mudslinging or personal attacks on each other, Sanders wrote. Meanwhile, the Center for American Progress is using its resources to smear Senator Booker, Senator Warren and myself, among others. This is hardly the way to build unity, or to win the general election.

During a rally Sunday, Sanders’s campaign also sent a letter to supporters blasting the center’s attack on him.

Last night, Sanders appeared on a FOX town hall with professional newsman Bret Baier and a somewhat menacing Martha MacCallum. Sanders was strong on trade, jobs and healthcare, but stumbled badly on guaranteed climate disaster in 12 years, overt discrimination in the U.S., and he continued his decades-long criticism of Israel, regardless of who was in power.

Baier, whose FOX salary is about $7 million a year, fumbled with his question about Sanders finally earning more than $1 million, thanks to book sales.

As on cue from CAP, Baier asked why Sanders didn’t pay extra income taxes, since he favors a higher rate than current law. Sanders replied that he paid what was legally required, and then suggested Baier and MacCallum donate part of their much higher salaries.

Not to escape the public’s notice, Trump blissfully reacted with a tweet this morning:

So weird to watch Crazy Bernie on . Not surprisingly, and the “audience” was (were) so smiley and nice. Very strange, and now we have ?

Donna Brazile was the Democratic National Committee (DNC) chair, who leaked CNN debate questions to Hillary’s campaign staff. Wikileaks reported:

A WikiLeaks e-mail dump revealed that Brazile sent an e-mail message on March 5, 2016, to John Podesta and Jennifer Palmieri with the title: “One of the questions directed to HRC tomorrow is from a woman with a rash.” The message continued, “her family has lead poison and she will ask what, if anything, will Hillary do as president to help the ppl of Flint.”

At the next event in Flint, Clinton was delivered a similar question from audience member Mikki Wade, whose family was affected by the poisoned water.

On October 11, 2016, a WikiLeaks e-mail dump included an e-mail Brazile sent on March 12 to Clinton communications director Jennifer Palmieri with the subject header: “From time to time I get questions in advance.”

In the e-mail, Brazile discussed her concern about Clinton’s ability to field a question regarding the death penalty, and in a CNN town hall debate the following day, Clinton received a similar question about the death penalty.

My opinion is that Trump was very wrong about criticizing Baier, but exactly right in suggesting someone at FOX was nuts to hire Brazile.

VAT is another big reason our factories are closed, and the good jobs have gone overseas

While the public is focused on tariffs and pundits are bemoaning the dangers of a “trade war,” our foreign competitors have the last laugh every day, watching our factories close and our colleges over-qualify future pizza delivery peons.

It doesn’t have to be that way. In fact, it’s easy to see a solution.

Here is one unfair trade example. Germany and the European Union charge a 10% tariff on cars they import from the U.S. We only charge 2.5% on cars imported from there into our country.

19% VAT in Germany on imports

That misses the bigger part of the story. In addition to their 10% tariff, Germany, for example, charges an additional 19% import Value Added Tax (VAT), bringing the total to 29% tax paid to the German government for expenditures that include “socialist” universal healthcare, expanded retirement benefits and subsidized higher education.

The U.S. has no VAT for public services. Business lobbyists oppose that tax system, complaining it is onerous to implement, but never explaining how they successfully do it in places like Romania, Slovenia or Turkey.

The result is an auto made and sold in the U.S.A. for $50,000 will cost $64,500 to buy in Germany. A $50,000 car made in Germany will cost $51,250 here. Surprise – not too many American cars on the Autobahn, but no shortage of dealers here for BMW, VW, Mercedes, Audi, Porsche and Opel.

Germany boasts 857,336 highly-paid workers in the truck and auto industry. That’s 3.5 times as many as the Big Three in this country. General Motors employs 97,000 people in the U.S. while Chrysler has 56,900, and Ford, 85,000 – a combined total of 239,000.

U.S. auto workers earn about $34 an hour – new hires far less. German auto workers average $67 an hour ($129,000 annually).

As an aside, while our streets seem clogged with foreign cars, did you ever wonder why there are so few foreign trucks?

The same politicians – who decry tariffs – decided decades ago to protect the American truck industry and imposed a 25% tariff (still in effect) on imported trucks. That tariff successfully keeps away foreign price competition from F-150 and Silverado pickups.

Even if we negotiate the elimination of all tariffs by all nations, the VAT will continue to strangle America’s ability to export goods.

In the EU example on this page most countries hover around 20% on imported goods from any nation outside the European Union. If we had the factories, that EU VAT would hit every tv, computer, refrigerator and espresso machine exported to them.

The Coalition for a Prosperous America (CPA) is asking Congress to improve the federal tax system to promote US trade competitiveness.

The group favors a strategic consumption tax:

…such as a Goods and Services Tax (GST), to improve America’s trade competitiveness. Currently, foreign governments charge US exporters value-added (VAT) taxes—averaging 17 percent globally—at their borders.

Most of these countries have reduced tariffs over the last 45 years—but replaced them with value added taxes. They use this new revenue to reduce other taxes and costs, and to fund national pension systems and health care.

The US is virtually alone in not collecting value added taxes on imports.

CPA said Congress should fix this foreign trade advantage “through an innovative and strategic consumption tax called a Goods and Services Tax.”

But Americans, especially the poor and working class, should not pay more taxes. Congress should therefore, at the same time, reduce or offset other domestic taxes and costs such as payroll taxes.

CPA suggested that a 13 percent GST could raise $1.4 trillion in revenue and fund “a full credit against payroll taxes, reduce personal income taxes, and provide a credit for healthcare costs.

US manufacturers would benefit from the cost reduction and receive a 13 percent GST rebate when exporting. Foreign companies would pay a 13 percent GST tax sending bringing goods into the US.

This sounds reasonable. The only folks who would oppose it are multi-national firms, who are sending our jobs and factories overseas, but those are the powers that seem to run Congress and have exerted extreme influence in the White House the past six administrations.

Click here for the text of CPA’s letter to the House Ways and Means Committee.

China also hits us with imported VAT, which could be as high as 16% standard, plus 3% National Education, 2% Local Education, 6% City Maintenance and 3% Construction services – a total of 30%.

Tariffs are hefty and additional.

Chinese VAT rates

Rate Type Which goods or services
16% Standard All other taxable goods and services since 1 May 2018
10% Standard Retail; entertainment; hotel; restaurants; catering services; real estate and construction, telephony calls; postal; transport and logistic. Since 1 May 2018
6% Standard Financial services and insurance; telephony and internet data; IT; technology; consulting.
3% Chinese National Education Tax
2% Chinese Local Education Taxes
6% City Maintance & Construction
3% Construction services

Double Cross of U.S./Mexico trade deal underway, which will make fools out of American consumers

The new United States-Mexico-Canada Agreement (USMCA) was signed November, last year, by the President with warm enthusiasm from Congress. The promise was a no-tariff zone, free trade, American prosperity, all good for big business and consumers.

Unfortunately, our Negotiator-in-Chief was trumped by Mexico. This House of Cards trade deal will create even larger deficits ($566 billion in 2017), and enhance China’s position as the world’s biggest exporter of goods – currently $2.26 trillion, about 1.5 times the U.S. or Germany.

To understand this fiasco, consider two elements.

Number one is that the average Jill doesn’t buy goods from China. American businesses do. And they buy at very low prices and sell at huge profits to the American market.

Consider the $100 phone made in China that costs you $1,200. Or sunglasses here at $550, that are $14 to import. And even our children are ripped off for sneakers that cost our companies $11 to import and are peddled here for $280 – on sale!

Importing from China guarantees huge profits for the modern business that will change suppliers to save a dime on a million-dollar purchase, or fire its older employees, just to save on health insurance premiums and seniority raises.

Number two is that the United States is working on a fair trade agreement with China. And if that doesn’t pan out, both countries will continue tariffs to protect domestic production, which will put a huge squeeze on American imports from China.

Now, back to USMCA.

U.S. imports in billions of $

Mexico looked at this deal with Donald Trump and his merry munchkins and decided it was flawed.

This conclusion may or may not have been a surprise to Trump’s chief negotiator, Steven Mnuchin, Treasury Secretary, and a director of Sears Holdings from 2005 to 2016. This avowed defender of the average American consumer is also a featured attendee of the Trilateral Commission, a former Hollywood producer and Executive VP at Goldman Sachs.

What did the Mexicans learn?

Luz Maria de la Mora, Mexico’s undersecretary of Foreign Trade of the Ministry of Economy, explained it this way at the Liánméng 2019 Forum:

If we want to remain competitive, we need to find ways that the Chinese investment will also come to Mexico, because we need to complement trade flows and imports we do in China. We need to bring to the region for China to continue to participate in these commercial flows.

De la Mora said Mexico should promote this type of mechanism with China and other countries to strengthen the country and, in some way, “face the protectionism (against China) that comes from the United States at this time.”

“We have to see the positive side; this is also opening opportunities for Mexico,” the undersecretary said.

We reached an agreement with clear rules, and we are ideally positioned to be the world’s production and export platform to the U.S., so I think this is also an opportunity between China and Mexico. We seek to reinforce those bonds and that shared production that we need so much and that I also believe our economies deserve.

We need to seek to build an agenda, and that is my responsibility, and I assure you that we are going to work with the Chinese authorities to seek to improve that regulatory aspect that allows us to have greater fluidity, he added.

In short, Mexico will import goods from the dictatorship of China, sell items to U.S. businesses without tariffs or quotas, making a fortune as the middleman, and subverting any agreements we make directly with the Chinese. The mad rush for imported products and overseas manufacturing will continue.

The only way the American worker and consumer will benefit from a new trade policy is if we cut imports of manufactured items and bring factories back to this country to create living-wage jobs.

The GOP/Chamber of Commerce plan ignores workers, focuses on balancing the U.S. current account, and offers these goals:

  • Export more agricultural products and create slave-wage jobs & encourage border jumping.
  • Tighten “intellectual property” rules to increase profits for Hollywood producers – no jobs added.
  • Expand our financial services and banking services to China, a Wall Street bonanza.
  • Provide more legal services to China – because we need more lawyers here?
  • Finally, produce to export amazing TV commercials like: “Liberty, Liberty, Liberty……Liberty”

New NAFTA helps Mexico and Canada, not U.S.A. workers. Is The Trump confused – or just a sellout?

For years I thought that what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big. It goes with the welfare of the country. Our contribution to the nation is considerable.

– Charles E. Wilson, 1953

As president of General Motors, Wilson led the firm through World War II, then became Secretary of Defense under Dwight D. “Ike” Eisenhower in 1953.

Eisenhower later decried the Military-Industrial Complex (MIC), not mentioning Wilson, but the public got the message – huge firms were getting rich from Defense spending.

Nearly 70 years later, little has changed for the fortunes of giant automakers, except now they have exported much of their manufacturing to Canada and Mexico, cutting American workers. The new slogan is: What’s good for General Motors is very good for America’s neighbors. Continue reading “New NAFTA helps Mexico and Canada, not U.S.A. workers. Is The Trump confused – or just a sellout?”