American Consequences - September 2018

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EU negotiations even the playing field. According to German think tank IFO, the unweighted EU customs duty on U.S. goods is 5.2% while the U.S. rate on EU goods is 3.5%. They would like to bring that average at least in line. Cars are a sticking point. U.S. imports of EU autos only pay a 2.5% duty while EU imports of U.S. cars pay a 10% duty. Again, the U.S. wants the playing field leveled. China gets even more complicated. But the main sticking point is the trade balance. In 2017, the U.S. ran a $375 billion trade deficit with China. Overall, the total U.S. trade deficit last year was $566 billion. In other words, China, our largest trading partner, was 66.3% of that deficit. Again, the administration would like to see that playing field leveled. Another way to look at the China fight is inevitability. Much like America wants to be the dominant global power, China sees itself in the same light. It has the largest global population by a factor – 1.4 billion of the 7.6 billion people globally live there versus 326 million in the U.S. At some point, push is going to come to shove. China wants to assert itself and garner



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respect as a dominant force. America wants to maintain that role. You can have this fight now or later, but it is coming...

American Consequences 19

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