I have straight up no idea how I came across this story that had sat in my bookmarks folder for, I think, years, but it discusses international tariffs, automobiles, and leeks, three of my favorite things.
China has the world’s largest auto market by a fairly strong margin over the United States, and it has had a number of unique requirements for foreign automakers. Up until recently all foreign manufacturers had to form joint ventures with domestic companies, which came up a few years back when GM worried about its tech getting stolen when it started selling the Volt over there.
And there are also increasingly strong electric vehicle requirements– strong enough to get four foreign automakers to all re-sell a Chinese domestic electric crossover with their own badges on the back.
And there are always questions of restrictive tariffs, something that has come up a lot since the start of the Trump administration.
One interesting story on that end goes back to 2002. Now, Japanese automakers have long been slightly touchy about the Chinese car market. On the one hand, they have to sell there as it’s huge, but there’s always a possibility of anti-Japanese sentiment flaring up. China and Japan have a lot of unresolved history still after Japan invaded in its wars of conquest leading up to WWII. I still remember people apparently hanging a giant “All Japanese Must Be Killed” banner in front of a car dealership in 2012.
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Okay, back to 2002. The big news was that Honda announced it’d be building its first factory in China dedicated to exporting cars. All of the major Japanese automakers were expanding Chinese production, in fact. The interesting part about it is laid out in a New York Times article, “Japan Carves Out Major Role in China’s Auto Future.”
It’s not just that auto production was expanding; it’s why.
Basically, around the turn of the 21st century, Japanese automakers became convinced that they couldn’t trust the Japanese government to prevent them from getting screwed over by unexpected tariffs. And the reason why is leeks:
But Japanese manufacturers do not trust the government to deftly handle the increasingly crucial trade relationship with China. Last year, after conservative farming interests succeeded in pushing the government to restrict imports of leeks, mushrooms and tatami mat rushes from China, China responded with high duties on Japanese cars, computers and cellphones.
‘’The whole vegetable spat sent a signal to them that maybe they could not import cars into China,’’ Mr. Richter said of the manufacturers. Though the trade dispute was defused in December after a nine-month standoff, many manufacturers hesitate to count on ready access to the Chinese market from Japan.
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Finding this all slightly hard to believe, I googled around for “leek japan auto china” and turned up this section of a book put out by Harvard University’s Asia Center and its Kennedy School Center for Business & Government under the title “Economics and National Security: The Case of China.” Indeed, the leek problem started small but got out of hand as author William Overholt details:
In April 2001 Japan started a minor trade war with China by imposing prohibitive tariffs on imports of mushrooms, leeks, and straw (for mats) from China. The imports in question were entirely by Japanese trading companies who had persuaded a group of particularly poor farmers in Shandong Province to change their crops to satisfy Japanese tastes in these items. The imports in question were small in scale and obviously of no strategic importance to the Japanese economy. The Japanese farmers received most of their income not from farming but from apartment buildings erected on subsidized agricultural land. (China retaliated with barriers on Japanese cars, air conditioners and mobile phones, but delayed implementation to give Tokyo time to back down.) This shows the extraordinary extent to which Japanese trade policy is vulnerable to tiny interest groups leveraging the agricultural cooperative movement.
I don’t know how much of this all is fair to rest on the shoulders of the mighty leek, as Japanese carmakers have been on a trend of moving production outside of the country thanks to high domestic costs for decades.
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But this is still an interesting story highlighting, well, that this is all sort of how international trade works. The biggest dealings always trace back to the smallest shit.
Let this be a lesson to you all: never underestimate the leek. Delicious, proud, and more powerful than you may have imagined.
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