Two facts are beyond dispute:
1) The EU imposes higher import taxes than the US
and
2) the US import more from the EU than they export into the EU
(source: Zeit)
Well, this suggests that the “partner” with lower import taxes is “the stupid one“, because he is the one who gets to import more than he can export. Basically, that sounds logical.
Let us look at the numbers and first take cars as an example.
The USA impose 2.5 % import taxes on cars. The EU imposes an import tax of 10 % on cars that transport passengers (cars, pick-up trucks if the loading area is smaller than half of the axis distance). This means that the EU imposes four times as much import tax as the USA.
Additionally, German car producers and their customers are also massively state subsidized (business car privilege, Diesel cars, research funds and prizes, no speed limit and no tolls, …).
The situation for motor bikes is similar: The USA charges 2.4% for the import, the EU charges 8 % for motor bikes with a cubic capacity up to 250 ccm and 6 % for motor bikes with more than 250 ccm. In other words: the EU charges more than 3/2.5 times as much as the USA.
In general, it can be said that the current import tax rates for the two partners USA and EU are relatively low . Depending on which source you take, you can read:
“For the EU, we are talking an average of around 3 per cent of the product value, for the US, we have a little less than 2.5 per cent.“ (Cited from and source: Handelsblatt)
“According to the World Trade Organization (WTO), the import tax of all US products in 2016 were at an average of 3.5 per cent. On the other hand, EU products had a rate of 5.2 per cent, and China even one of 9.9 per cent.“
(Cited from and source Spiegel)
So both sources say that the EU import taxes are, on average, considerably higher than those imposed by the USA (according to Handelsblatt by 25 %, according to Spiegel almost 50 %. For more information about import taxes, click here).
If you consider the twenty leading import and export countries for steel in 2010 (source: Wikipedia), you will notice that many countries exported around the same amount as they imported.
For Germany, this meant an export of 25,352 and an import of 22,733 (thousand tons) in 2010. For many other countries, such as Great Britain, France, Italy, Canada, Austria, Mexico, South Korea, Taiwan, … the export/import balance is similar.
Countries like China, Japan, Russia, that, for instance, exported twice as much as they imported, or at least considerably more than they imported. On the other hand, the USA imported twice as much as they exported – and the tendency increases.
But let us now assume the countries would first use their own steel and only export what they do not need, or else import what they cannot produce.
What a gigantic savings potential would lie in such a behaviour, along with all the avoided extravagance and environmental damage? Because overcoming the time-space threshold generally costs so much more than the allegedly so cheap transport.
In the late-capitalist world order, these ideas are unpopular and inconvenient. The conservative economic science of the 19th and 20th centuries, too, will simply tell you such assumptions are nonsense.
Because, according to the old theories, free trade is beneficial for all parties concerned and basically the requirement for global wealth. But what will “global wealth” be worth for me if the planet is spoiled in the process? Is such a thing as “global wealth” possible at all in reality?
In late capitalism, globalisation basically always was exclusively oriented towards taking advantage of the world-wide differences in wealth in order to maximize profit. It is always about making use of cheap labour. External costs, such as the destruction of nature, will be ignored – and this has been practiced for a long time. The fact that overcoming the time-space threshold costs considerably more than just the transport is “forgotten”.
In my eyes, the much-praised globalization becomes more and more suspect. I do not know how Mr. Trump feels about it. He is probably the last person who has the environment on his agenda. But perhaps protective taxes are exactly what the world (the environment) needs today.
RMD
(Translated by EG)
P.S.
They say that a “trade war” is now threatening. I find it rather sad that the term “war” is used in this context. I believe we would find it quite easy to live with the consequences of a world full of tax mechanisms. The same is true for border control mechanisms. The consequences and the atrocities of all kinds associated with a true war, however, would mean a totally different dimension of misery.
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