CANADA MEXICO CHINA USA TRADE America Just KILLED China's BIGGEST Industry

..with transcripts  published before the USA election  September 2024

...

the US recently fixed the loopholes in

0:02

the Tariff laws it barred companies like

0:04

temu and Sheen from exploiting the

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Dominus exemption that's meant for

0:08

individual tourists to bring home

0:09

souvenirs after their trips Chinese

0:12

companies lost billions of dollars in

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market cap within seconds of the law

0:17

being announced while many experts

0:19

deemed it to be a measure that was long

0:21

overdue in 2023 the United States bought

0:24

more goods from Mexico than it did from

0:27

China for the first time in 20 years

0:30

this is a big win for the North American

0:32

Regional economy and it shows that the

0:35

US has become less dependent on Chinese

0:37

Imports or that's what it seems like

0:41

during the same year shipping volume

0:43

from China to Mexico skyrocketed by

0:48

59.7% the shipping route from China to

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Mexico is the fastest growing one in the

0:53

world right now but this is a bit

0:56

suspicious as you might expect a lot of

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the goods arriving in Mexico get

1:00

transported to the United States

1:02

afterwards there's one reason to take

1:04

this elaborate route following the trade

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War this has become a smart way to

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circumvent us sanctions Mexico hasn't

1:12

placed the same tariffs and import

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restrictions on Chinese goods and

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China's tactics are ever evolving as

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it's now also moving factories to Mexico

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and trying to find legal loopholes this

Trade War

1:24

involves Mexico's free access to the US

1:26

market with the US MCA agreement as well

1:28

as the DI Minimus import law so let's

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take a deep dive into how China is

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trying to bypass Washington's trade

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restrictions and how the US is reacting

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to this but before that please be sure

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to hit the like button below any video

1:43

relating to the CCP has a risk of being

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downvoted by ccp's 50 Cent Army to kill

1:48

its reach in the algorithm so your likes

1:51

help us out a

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lot China benefits a lot from the

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current global economy it has the single

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biggest Trade Surplus in the world

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reaching 823 billion US in

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2023 about a third of this comes from

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the United States as it posted a trade

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deficit with China worth $279 billion in

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the same year you can understand that it

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doesn't want to lose this precious

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Market but starting in 2018 it looked

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like the days of American dollars

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flowing to China were over because

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president Donald Trump didn't like this

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huge trade deficit he decided to place

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tariffs on various Chinese Goods

2:28

effectively starting a trade War the

2:31

first round of sanctions targeted more

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than 1,300 Chinese products worth around

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50 to 60 billion in yearly Revenue

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Beijing retaliated by placing import

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tariffs on American Goods including

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agricultural products these back and

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forth rounds of tariffs continued until

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the end of

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2019 ultimately $362 billion worth of

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Chinese products faced increased import

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tariffs China had placed sanctions on

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1,717 items from the US us representing

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about onethird of all imported American

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Goods in the beginning of 2020 the US

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and China reached an agreement to stop

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the escalation the US wouldn't increase

3:10

tariffs if China bought $200 billion of

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additional American Products including

3:15

$50 billion of agricultural Goods the

3:18

deal didn't really succeed because China

3:21

failed to meet the Target by about

3:23

40% although the trade War slowed down

3:25

due to the pandemic it definitely didn't

3:27

end the Biden Administration kept the

3:30

import tariffs in place and the results

3:32

of this policy showed right now the

3:34

trade deficit with China is at its

3:36

lowest point since

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2010 even though this is also related to

3:40

the economic slowdown in China the

3:42

import tariffs definitely had an impact

3:45

in some areas President Joe Biden has

3:47

even escalated the trade War through

3:49

export controls he wants to destroy

3:51

China's capability to make advanced

3:54

chips looking into the future there is

3:56

no sign of the trade War slowing down

3:59

Joe Biden has called for the import

4:00

tariffs on Chinese steel and aluminum to

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go from 7.5% to

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22.5% just like his former rival Trump

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he is still advocating for perfectionist

4:10

trade policies to preserve strategic

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Industries still if Trump wins the

4:15

election there will be even more

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escalations in the trade War Trump has

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called for import tariffs of more than

4:20

60% on various Chinese Imports

4:23

effectively killing China's

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competitiveness in the US market because

4:27

of the looming dangers of the trade War

4:29

the CCP decided to use the North

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American free trade zone to its

China in Mexico

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Advantage first we have to talk about

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China's involvement in the Mexican

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manufacturing industry 40% of Mexico's

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GDP is in manufacturing and a large

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share of its products are going to the

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United States this is caused by the free

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trade zone within the US according to

4:50

the usmca agreement Goods produced in

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Mexico can be exported to the largest

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economy in the world without paying any

4:58

import tariffs because it understands

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how strategic the country is China has

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gotten itself a good position in

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Mexico's supply chain it exports tons of

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electronic equipment machinery Plastics

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and metals to the country in this way

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it's indirectly making money from the US

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as the supplier of its leading

5:18

manufacturer but the Chinese involvement

5:20

goes far deeper than that Chinese

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companies are setting up shop in Mexico

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itself to produce Goods for the United

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States Market the husan industrial park

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in nevon is the biggest example of this

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two Chinese investment funds develop the

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area just 200 km south of Texas the park

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now houses various chinese-owned

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factories worth hundreds of millions of

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dollars producing electronics fiture and

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gardening equipment in general Chinese

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investment into Mexico has been growing

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over the years reaching a peak of over

5:52

$400 million in

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2021 and this could get even bigger in

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the future Chinese corporate Giants are

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also o considering investing in Mexico

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including the electric vehicle maker byd

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this is the largest ev company in the

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world by the way recently overtaking

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Tesla in car soul for many companies

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including byd it makes a lot of sense to

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have a manufacturing plant in Mexico

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cars from chinese-owned factories in

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Mexico still count as Mexican products

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even though the profits go to China

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Chinese cars face a 27.5% import tax in

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the US while these technically Mexican

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cars only have a 2.5% tariff meanwhile

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the EVS made in Mexico qualify for a

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$7500 tax credit under the inflation

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reduction act apart from the Tariff and

6:42

the tax incentives the business

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fundamentals of moving to Mexico are

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also pretty good manufacturing wages in

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China have been increasing as you can

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see on this chart and Chinese

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manufacturers are facing growing labor

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shortages according to one survey 80% of

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them had shortages in the 100 or the

7:00

thousands China's very own Ministry of

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Education said the country will be short

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30 million Factory workers by the next

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year to make the move even more

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appealing Mexico has slightly lower

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manufacturing wages than China and more

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stable salaries there's also a reduction

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in transportation costs because the

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manufacturers move close to their target

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market still we can be a little bit

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skeptical about the Chinese factories in

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Mexico for example they may have strong

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connections to Chinese supply lines

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although the products are labeled as

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made in Mexico many of the assembled

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Parts could be Chinese what's even more

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important is that the profit goes into

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China's Pockets this means that China

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will be able to replace some of the

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income lost through the trade War but we

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also have to take into account the

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geopolitical effects through huge

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investments in the Mexican economy China

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is getting itself a lot of influence in

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the country this dashes the hopes of an

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independent North American economy

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and it strains the ties between Mexico

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and the

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US still involvement in the Mexican

ECommerce Giants

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manufacturing industry is not the only

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way to circumvent the trade War tariffs

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to understand this we have to look at

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the e-commerce Giants te and Sheen their

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business model is pretty simple sell

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just about everything at incredibly low

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prices temo in particular has been

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pretty successful for months it was the

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most downloaded app on both the App

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Store and the Google Play Store in the

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United States

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the company even got itself a Super Bowl

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advertisement with the slogan shop like

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a billionaire but there's something

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Shady about these Chinese e-commerce

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businesses they use a loophole in the US

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tax code called the DI Minimus rule

8:43

Imports under a certain value don't have

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to pay duties back in 2015 the price

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limit for this tax exemption was raised

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from $200 to

8:52

$800 this was originally supposed to

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save a lot of hassle for Customs

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officials and people crossing the border

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you don't have to fill out complicated

9:01

forms for souvenirs or other small

9:04

purchases but for Tamu and Sheen it's a

9:07

different story they use the Dom Minimus

9:09

rule for nearly all of their packages

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which is a big deal these two websites

9:15

alone now contribute to nearly a third

9:17

of all small packages coming into the US

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in total the Dom Minimus tax exemption

9:22

applies to more than 75% of packages

9:25

coming to the US the law was written

9:28

before the rise of e-commerce so

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lawmakers couldn't really have seen this

9:31

coming but the effects of it are

9:34

dramatic because Chinese e-commerce

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stores don't have to pay import taxes

9:38

they can easily outcompete us businesses

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apart from having a negative effect on

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American businesses and jobs this is

9:45

also hurting Washington's tax and trade

9:47

policies the Lost import tax revenue

9:50

ranges in the billions of dollars and

9:53

because online web shops are now a

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multi-trillion dollar industry this also

9:57

has an effect on the US China trade

10:00

balance but the consequences of the

10:02

loophole go beyond just teu and Sheen

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warehouses are now being built in Mexico

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and Canada to take advantage of the D

10:09

Minimus regulation they're basically

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fulfillment centers for companies

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selling in the US certain retailers need

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to import Chinese products and bulk

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which is a big problem because of the

10:19

Hefty tariffs warehouses in the Border

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towns on the Northern or Southern border

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can be the solution the containers can

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be processed at low tariff rates in

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Mexico or Canadian ports like the port

10:30

of insata or the port of Vancouver then

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the company ship individual packages to

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their customers across the border using

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the DI Minimus tax exemption this does

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come with a downside of longer delivery

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time in some states but in a lot of

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product categories the benefits outweigh

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the downsides keep in mind that these

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products don't fall under the usual

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duty-free access in the US MCA area

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because the products are made entirely

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in China Canadian or Mexican importers

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would have to pay taxes if the price was

11:00

above

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$800 but that's the trick because the

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scheme is so effective there's a lot of

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investment going into this for example

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the logistics and shipping company meis

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has recently built a new Factory in

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Tiana the city is located just 20 M from

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San Diego about 32 km in its press

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statement the company said that it could

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use this for Section 321 shipment type

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operations AKA tariff evasion Amazon did

Canada

11:29

the same thing building a fulfillment

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center in the same Border Town China is

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the biggest beneficiary of this because

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it gives it a Lifeline to keep selling

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products to the US these Bordertown

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warehouses are one of the explanations

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for the flourishing China Mexico trade

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and to some extent this is also

11:47

happening on the US Canada Border it

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isn't as obvious as Chinese Goods going

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through Mexico since Canada's imports

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from China have only grown slightly as

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you can see on this chart Canada's

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Imports of Chinese products in increased

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with about $1 billion over the last 4

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years although it's relatively small a

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part of this 10 billion consists of

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Chinese products going through Canadian

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fulfillment centers one logistics

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company in Toronto is very open about

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this when the trade War Began it

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advertised itself as an intermediary

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between Chinese manufacturers and US

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consumers nevertheless the tactics for

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circumventing trade War taxes might

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disappear just as fast as they've come

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US government officials are increasingly

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wey of Chinese investments in Mexico and

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the potential EV plants of byd will not

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go unnoticed the current Administration

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has already expressed concern about

12:38

Chinese car makers entering the Mexican

12:40

economy and it might introduce policies

12:43

to combat them in the scenario that

12:45

Trump gets reelected these sanctions are

12:47

coming there for sure Trump has said he

12:50

will impose a 100% tariff on ev's made

12:53

in Mexico by Chinese companies if he

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gets elected meanwhile Washington is

12:58

putting pressure on Mexico and Canada to

13:00

produce higher import taxes on Chinese

13:02

Goods recently some senior members of

13:05

President Biden's Administration went to

13:06

Mexico in order to discuss these issues

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and they were pretty successful soon

13:12

after Mexico announced tariff hikes on

13:14

more than 500 kinds of imported Chinese

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products the new rates sit between 5 and

13:19

50% affecting around 90% of all the

13:22

Chinese Goods going to Mexico because

13:25

the United States is still the most

13:27

influential country in Mexico the the

13:29

Mexican Government likely had no choice

13:31

but to listen to its demands and the

13:33

most deadly blow to China's tariff

13:35

invasions might be yet to come several

13:38

us lawmakers are calling for an end of

13:40

the current Dom Minimus regulations

13:42

together with a coalition of labor

13:44

unions and Manufacturing groups they're

13:46

pushing a bill to reform the import tax

13:48

system one idea is to vary the DI

13:51

Minimus threshold based on where the

13:52

product originates from the bill could

13:55

get bipartisan support because many of

13:57

the issues at hand are important to both

14:00

sides for one the current tax exemptions

14:02

are hurting the trade balance with China

14:04

on top of that many Chinese products are

14:06

fundamentally uncompetitive this is

14:09

especially true in the textile industry

14:11

China is flooding the US with heavily

14:13

subsidized textile products made with

14:16

the forced labor of the Wagers in Xin

14:18

Jang because they can sell these

14:20

uncompetitive products without paying

14:22

import duties us businesses are at a

14:24

huge

14:25

disadvantage this has terrible effects

14:29

in the span of just 5 months the

14:31

American textile industry lost 10

14:33

manufacturing plants another blatantly

14:36

obvious issue with the di Minimus rule

14:37

is the amount of packages entering the

14:39

US unchecked most packages under $800

14:43

are not checked by custom officials

14:45

that's why 90% of all illegal Goods

14:48

including narcotics enter the US in this

14:50

way with the alleged Chinese involvement

14:53

in the fenel crisis this is a huge

14:55

problem all the more reason to scrap

14:58

this legislation

Free Trade Zone

15:00

so the US government has the tools to

15:02

stop the Chinese tariff evasions this is

15:05

very important both for the trade War

15:07

but also for the wider geopolitical

15:08

picture in order to keep the free trade

15:11

zone with Mexico and Canada Washington

15:13

needs to limit the Chinese Goods flowing

15:15

into these countries this is the only

15:17

way to have an independent North

15:19

American economy which is a very

15:21

strategic asset the free trade zone

15:24

stems back to 1994 when the three

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countries cut out Import and Export

15:27

tariffs to stimulate trade in this

15:30

regard it was very successful trade

15:32

between the United States and Mexico

15:34

increased almost 10 fold from $81

15:36

billion in 1993 to $798 billion in

15:40

2023 us trade with Canada also grew

15:43

significantly more than tripling from

15:45

$211 billion to $774 billion over the

15:49

same time period the free trade zone did

15:52

get a lot of criticism from Donald Trump

15:54

because of the negative impacts on us

15:55

Industries and jobs this is because the

15:58

United States has a trade deficit with

16:00

both Mexico and Canada which means that

16:02

the US market gets flooded with foreign

16:04

Goods in 2022 this trade deficit was

16:07

53.5 billion with Canada and $1 130.5

16:11

billion with Mexico still there's one

16:14

big advantage to the economic ties with

16:16

these neighbors to understand this we

16:18

have to look at the drastic changes in

16:20

the geopolitical landscape the Pax

16:23

Americana which lay the basis for global

16:26

trade has been replaced by a multi molar

16:29

World Order because of Chinese trade the

16:32

US isn't the Undisputed leader of the

16:34

world anymore both economically and

16:36

geopolitically the economic implications

16:38

of this new world order are huge for

16:41

decades the United States had

16:43

safeguarded global trade but if the

16:45

world order turns multi-polar the

16:48

downsides of global trade could outweigh

16:50

the benefits Washington can't guarantee

16:53

stability anymore which means that

16:55

global trade routes can be disrupted by

16:57

conflicts in turn many countries want to

16:59

limit their economic dependencies on

17:01

other nations but there's one exception

17:03

to this rule Regional allies while

17:07

Washington may lose its leadership role

17:09

in the Middle East or East Asia it can

17:11

definitely keep it in North America this

17:13

is why economic ties with Mexico or

17:15

Canada are beneficial even in a

17:17

multi-polar world and Mexico and Canada

17:20

can replace many of the older trade

17:23

partners that the United States has

17:25

Mexico has relatively cheap labor and

17:27

it's a huge sales Market Market

17:29

something that us businesses can benefit

17:31

from Canada is already the biggest

17:33

energy supplier to the US accounting for

17:35

52% of total petroleum Imports this

17:39

could last a while since the country has

17:40

the third largest estimated oil reserves

17:43

only behind Venezuela and Saudi Arabia

17:45

on top of that Canada also has a lot of

17:48

other natural resources like minerals

17:50

and metals Washington's neighbors have a

17:52

lot to offer which is why the region is

17:55

worth protecting from Chinese influence

17:58

to sum it all up China tried to

17:59

manipulate the free trade zone and other

18:01

legal loopholes to circumvent us tariffs

18:04

with the China Mexico trade route

18:06

flourishing as well as the rise of TAMU

18:08

and Sheen this seems to be working but

18:11

the cracks they're already showing with

18:14

new pieces of legislation and diplomatic

18:16

action Washington is trying to stop

18:18

China's evasion tactics hopefully this

18:21

will secure the trade balance and

18:22

strengthen the North American economy