UK Government Shuns Tariffs on Chinese Vehicle Imports
Consumption is the sole end and purpose of all production. The consumer in this story is a district nurse in Stoke who drives some distance between patients each day and whose old hatchback has begun to complain in the mornings. She will stand on a forecourt this winter with a finance quotation in her hand. Let us ask whether the arrangement now under dispute serves her, or serves someone who will never visit that forecourt.
The British government, through Mr Jonathan Reynolds, has declined to place tariffs on vehicles made in China. Nothing has been given to the nurse, but nothing has been taken from her either. She remains free to buy the cheaper car if she judges it the better one, and the makers of dearer cars remain free to persuade her otherwise by making them better, or cheaper, or both. For a minister to refrain from a tax is so modest an act that one hesitates to praise it. Yet it has provoked objection from across the Channel, and the objection deserves careful attention, because what it reveals is more interesting than what it states.
The European Union’s complaint is that Britain may become a back door through which cheap Chinese vehicles pass into the European market. I do not dismiss the European producer’s position. Our neighbours have built tariff walls around their motor industry because they believe, not unreasonably, that the Chinese manufacturer is assisted by its state in ways no private firm could match, and that an industry once lost is not easily rebuilt. Thousands of families in Wolfsburg, Turin and Valenciennes take their wages from that industry, and a philosopher who cannot enter their anxiety has no business discussing the matter. If a foreign government sells below cost until its rivals are ruined, and then raises prices to recover the expense, the consumer who was flattered at the start is fleeced at the end. That is the strongest form of the argument, and it is not foolish.
Consider, however, what a back door must be to deserve the name. A car is not a parcel of lace that may be smuggled in a coat lining. It carries a chassis number, a certificate of origin and a manufacturer’s paperwork, and the trading agreement between Britain and the Union already requires that goods prove where they were made before they enjoy any preference at the border. A Chinese car landed at Southampton does not become British by sitting in a car park, any more than a Bordeaux becomes Scotch by spending a night in Leith. So the door through which these cars would pass is one the customs officer can already see and already lock.
What, then, is truly feared? I suspect the thing that will cross the Channel is not the car but the price. Once a British family can be seen buying a perfectly serviceable electric vehicle for considerably less than its counterpart in Lille or Lyon pays for a comparable one, the continental consumer will begin to wonder in whose service the wall was raised. Protection is easiest to maintain when the protected price is the only price anyone has seen. A neighbour who keeps his garden unfenced is a standing reproach to the man who has fenced his own and charges admission to his family.
As to the predatory danger, it requires something rarely examined, which is a market one seller can actually capture. Britain buys cars from Japan, Korea, Germany, France, America and a domestic industry under several foreign owners; a Chinese firm hoping to ruin all of them and then extract monopoly profits would need patience and a purse beyond anything rational. And if a foreign state chooses to tax its own citizens so that the nurse in Stoke pays less for her car, it is a curious kind of injury that leaves her better off. Where dumping is proven, there are particular remedies, case by case, with evidence laid before a tribunal. A general tariff is not such a remedy. It is a fine levied on every buyer in advance, against a crime that has not been shown.
The interest of the European carmaker and the interest of the British driver are not the same, and Brussels has been candid only about the first. One notices, in all the discussion of doors and walls, that no one has asked the nurse what she would prefer to pay, nor the young electrician in Swindon whether he should fund the Bavarian engineer’s pension through the price of his van. These people do not hold press conferences. They hold finance quotations, and they read them carefully, twice, at the kitchen table after the children are in bed.
The Union is welcome to keep its walls. It has simply discovered that the most dangerous thing about an open door is that people on the other side of the wall can see through it.