German bikes

Milton Freedman was one of my favorite economist. He was a big believer in free trade. He maintained that if country A could make quality widgets cheaper than any other country then they should make all the widgets for the world. He recognized that there would be difference in labor cost and environmental regulations but what he never suspected was government subsidies and currency manipulation. In 2001 China entered the WTO with the understanding that they would follow the rules laid out by the organization but they immediately tossed the rules aside. They devalued their currency to make their exports cheaper and they offered government subsidies to manufacturers so they could sell products on the world market at below the cost of production. There is a German bike company that has a reputation of producing the finest bikes in the world. The bikes use frames made in China and they are assembled in Taiwan and shipped to Germany where they pay a 10% import tax. China is the worlds largest bike manufacturer and could easily run the German company out of business but if they ship their bikes directly to Germany they will be charged a 50% import tax and this is the only reason why the German company is still in business. Germany has many import taxes so they are net exporters. Last year Germany exported $1.376 trillion and imported $1.203 trillion giving them a positive balance of trade of $173 billion which is one of the reasons that Germany has budget deficit of only $40 billion. By comparison the US has a trade deficit of $860 billion. Trump understood that China was cheating and he imposed a ten percent import tax on $300 billion of goods coming in from China. Until China agrees to play by the rules that other countries must follow they should be subjected to taxes on all of their exports.