Friday, August 31, 2018

Tariffs On Compact Trucks

The Europeans have announced that they're willing to negotiate on vehicle tariffs with Trump, proposing a zero-for-zero tariff rate an motor vehicles. This sounds great and makes perfect sense, but how did we get there?

The 25% tariff on light trucks was imposed in retaliation for a European tariff on U.S. frozen chickens. Euros don't buy pickups like we do but Ford builds the Ranger in Germany, hence no Rangers in the U.S. Because we can sell Hans or Pierre a frozen chicken for less than Fritz can, shipping included. The American consumers and the European auto makers lost, but the European chicken farmers won, which should tell you where the votes and money are although I have a hard time seeing this.

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