Not All Goods Are Traded Equal : Planet Money Not all goods are created equal: some are exempt from tariffs.
NPR logo

Not All Goods Are Traded Equal

  • Download
  • <iframe src="https://www.npr.org/player/embed/754837871/755097342" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
Not All Goods Are Traded Equal

Not All Goods Are Traded Equal

  • Download
  • <iframe src="https://www.npr.org/player/embed/754837871/755097342" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

CARDIFF GARCIA, HOST:

The trade war between the U.S. and China has really intensified in recent weeks. You may have heard. The Trump administration announced first in mid-August that it would impose new tariffs on goods that come from China. The Chinese government then retaliated with tariffs of its own on American products that go to China. And then last week, the Trump administration retaliated against the retaliation by announcing that its earlier tariffs would be higher than previously established. It's easy to lose track of this stuff.

Then, Danielle, there was a whole thing where the president tweeted that he was ordering U.S. companies to stop doing business with China - not clear how much he meant it, so I guess we'll just leave that aside for now.

DANIELLE KURTZLEBEN, HOST:

He was hereby ordering it.

GARCIA: He hereby ordered - yes.

KURTZLEBEN: Hereby ordered - that's how this works. The result is that by December 15, Americans and American companies will be paying a tariff on the vast majority of goods that they buy from China. And America buys a lot of stuff from China - about $550 billion worth - so those tariffs mean that Americans are paying much higher taxes on those goods than before.

GARCIA: But the vast majority of goods is not the same thing as every single good. Some goods that are imported from China into the U.S. are exempt from tariffs, and they have a story, too. That's what this episode is about.

I'm Cardiff Garcia.

KURTZLEBEN: And I'm Danielle Kurtzleben from the NPR Politics Podcast, filling in for Stacey Vanek Smith. Today on THE INDICATOR FROM PLANET MONEY, a chat with Lydia DePillis of ProPublica. She tells us about some of the goods imported from China that get to sit out the trade war. How did these goods get exempt from tariffs, and what do these exemptions tell us about the way trade policy is now being handled?

(SOUNDBITE OF MUSIC)

GARCIA: So Lydia, there is a process through which U.S. companies that import goods from China can request exemptions so that they don't have to pay tariffs on those goods. And for this last round of tariffs, the exclusion process was, like, kind of rushed. And so the U.S. trade representative said that it was granting some exemptions on about $2 billion worth of goods for reasons of health, safety, national security and, quote, "other factors."

So let's talk about some of those exempt goods. Let's start with religious texts like the Bible. What's the story there?

LYDIA DEPILLIS: So initially, they just threw in the whole category of, basically, publications and then explicitly put back in every other type of publication within that category, other than religious texts. The reason they did that - well, you can imagine a few reasons because they didn't give us one.

But, you know, going back through the record on this and talking to folks involved, it sounds like there were a bunch of Christian publishers who said that this would be harmful to our ability to distribute Bibles throughout the world. There were powerful Christian groups, like the Southern Baptist Conference, who said this is going to be bad for the worldwide practice of Christianity.

And also, by the way, we - almost all of these come from China. Like, we depend on China for Bibles more than we depend on China for other types of books because they've become specialized. There's, like, gold-brushed sides and embossed leather covers, and it's a very fine printing process for the thin paper that you need to get that many words into a book.

But, you know, there are regular mainstream publishers pointing out that this is a really troubling precedent because historically, all types of published work have been exempted from tariffs because we consider it a type of protected good that fosters the distribution of knowledge throughout the world. And to exempt a religious type of knowledge but not, you know, a biological textbook makes not much sense to lots of folks.

GARCIA: Let's go to the next category of goods that were exempt - fish products, like fish nuggets that are processed in China.

DEPILLIS: Yeah.

GARCIA: Why on earth were those excluded from the tariffs on grounds of health, safety, national security or other?

DEPILLIS: Right. Well, so you can imagine a few justifications for this. One, again, China has become very good at gutting fish and doing the things that need to be done to then make it into products that end up on our grocery shelves. And so you could argue that, for health reasons, you want to make sure you have a sanitary production line, and to change things up could result in contamination of some kind. I don't know that that's any better reason than any other product that goes abroad to be processed and comes back.

The other argument that got made by Alaska's congressional delegation was that basically, like, economic security is national security, and therefore, to weaken this home state industry would be bad for the U.S. in a military sense, which is also kind of stretching, in my opinion, but whatever. Senators wanted it. And so salmon, cod, haddock was waved through, although interestingly, pollock was not exempted, and there happens to just be a bigger pollock processing industry in the U.S. So there are enough associations and companies saying, like, please keep these tariffs on. It'll help protect another part of the industry. So those were kept in place.

GARCIA: So let's go through the last category that you described in your article. These are minerals and other things that go into making machinery and equipment and things that are used by the national security apparatus, but also things that go into other industrial technologies. What's going on there?

DEPILLIS: So these are also elements that are mined in, you know, lots of parts of the world, but the biggest supply of them and in the purest form is China. And so a couple of examples - zirconium goes into nuclear fuel rods, and the Navy needs those for powering submarines and also aircraft carriers. And so a bunch of defense contractors said, like, hey, if you keep us from importing zirconium or you make it more expensive, then this is going to make it harder for anybody to, you know, fuel their nuclear submarines. And that would be bad for national security. And I see that connection, right?

Another one is barite, and that happens to be an essential ingredient in hydraulic fracturing, which is fracking - most people know it by - which has been the key to our huge shale revolution that's powered, you know, a lot of manufacturing and a lot of prosperity. And so, you know, again, they also made the argument that having domestic sources of oil and gas is good for national security. But it so happens that in order to have that domestic source of oil and gas, you need to import stuff. So...

GARCIA: And when you look at all these goods that have been exempt, I mean, is there any common thread, or is this kind of ad hoc? Like, who had a lobbying industry that was most effective? What do you think about that?

DEPILLIS: Yeah. I mean, it may be that there's things we can't see, phone calls that were made. We don't know all of what happened behind the scenes. But it's certainly clear that every one of those goods had someone asking for it - probably many people, probably some powerful people where you might have seen some severe blowback because, like, for example, you're a politician, like the president, and you allow something to be called, like, a Bible tax happen on your watch. That's probably not really great for your election next year.

GARCIA: Yeah. I mean, as I look through it, also - I mean, one of the parts of President Trump's platform when he was campaigning a few years ago was that he would try to help revive the manufacturing sector, and now we've got some goods that are necessary for manufacturing technology, including defense technologies, being exempt. Certainly, the evangelical community has been largely supportive of President Trump, and you've got religious texts exempt. But yeah, it seems like, in this case, it is also maybe even just a more banal story of a politician doing things for his constituency.

DEPILLIS: For sure, right? Like, that's actually what lobbying is - like, constituents petitioning their elected representatives for, like, the redress of their concerns. So there's nothing necessarily nefarious about it, but it's just that there's probably lots of companies that could make a similarly strong case that maybe, like, didn't have time because they're too busy running their business to go testify in Washington and, like, have a lawyer write a letter. And those are the people who are going to get hit because they didn't - they weren't the squeaky wheel.

GARCIA: Lydia DePillis, thanks so much for being on the show.

DEPILLIS: My pleasure.

GARCIA: This podcast was produced by Darius Rafieyan, edited by Paddy Hirsch and fact-checked by Emily Lang. THE INDICATOR is a production of NPR.

Copyright © 2019 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.