Caterpillar is one excellent company. It is building new factories now in Texas, Arkansas, and North Carolina, from which it will export products made by American workers all around the world. Its excellent worldwide parts distribution network gives its used equipment a very high resale value. But on September 29 Caterpillar announced it is building its twelfth factory in China — this one to produce mini-excavators.
Why can’t Caterpillar make a profit exporting mini-excavators to China? The answer is simple: China has a 30% tariff on all excavators. In fact it has a similar high tariff on just about every vehicle, be it a Ford car, a GMC truck, a Harley Davidson motorcycle, or a giant mining machine made by Bucyrus International.
When President Obama’s economic adviser Larry Summers was Secretary of the Treasury under President Clinton, he oversaw China’s entry to the WTO (World Trade Organization), and he let China declare all these vehicles as a “strategic sector” entitled to high protective tariffs. This error, by itself, should have disqualified Summers from ever again holding a responsible position in the United States government.
No comments yet.