Saturday, December 28, 2019

Free and fair trade

For many years Germany has placed a ten percent import tax on US cars while the US has a 2.5% import tax on German cars. Trump challenged that and this caused some turmoil in the Germany economy especially in the auto industry. Trump asked for a fair trade and when nothing was done, he put an import tax on steel and aluminum from Germany. Germany threatened to tax imports of US goods. Trump then proposed a 25% tax on German auto imports and this has caused the German economy to go into a downward spiral and is now heading toward a recession. Recently the German auto industry has proposed eliminating the ten percent import tax on US cars. Trump wants fair trade and uses the threat of import taxes as a negotiating tool. He has the upper hand because the US has a negative trade balance with the rest of the world. He has proposed getting rid of all import taxes but that was met with silence. That would be real free trade.

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