I’m no expert by any means in the laws and rules regarding exporting and importing. But I found this article on the National Textile Association’s website. So I will take their word on this. Here is a bit from the article:
“Take the yarn spinner I heard from at the Washington meeting. He cannot sell his product in China because even if he can meet the price of locally-produced Chinese yarn (which benefits from the low wages and environmental standards in China and the government subsidies such as free electricity) he is faced with paying the 17% Chinese valued-added tax (VAT) on top of the 10% import duty. He has already paid the full cost of U.S. federal, state, and local taxes, and will have to pay Chinese tax in addition.”
On the other hand, a Chinese company can ship yarn to the U.S. and pay just the import duty (also about 10%). The U.S. has no VAT or other taxes imposed on imports comparable to the income tax, property tax, and other taxes paid by domestic manufacturers. Furthermore, that Chinese company can get a Chinese government refund of the VAT when the company exports to the U.S.”
Source:
POST-GAZETTE – Res Publica Heads, I Win; Tails, You Lose by David Trumbull April 20, 2007
