The trade fraud detective

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 23 August 2024

⏱️ 29 minutes

🔗️ Recording | iTunes | RSS

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Summary

When David Rashid took over US autoparts maker Plews and Edelmann, the company was losing business to its Chinese rival, Qingdao Sunsong. Both companies make power steering hoses, but Sunsong was offering its hoses to retailers at a much lower price.

Then, in 2018, the Trump administration threw companies like Rashid's a lifeline, by announcing tariffs on a range of Chinese goods, including some autoparts. Rashid thought the tariffs would finally force Sunsong to raise its prices, but, somehow, the company never did.

It was a mystery. And it led Rashid to take on a new role – amateur trade fraud investigator. How could his competitor, Sunsong, absorb that 25% tax without changing its prices? And why had all of Sunsong's steering hoses stopped coming from China and started coming from Thailand?

On today's episode, the wide gulf between how tariffs work in theory... and how they actually work in practice. And David Rashid's quest to figure out what, if anything, he could do about it. It's a quest that will involve international detectives, forensic chemists, and a friendship founded on a shared love for hummus.

This episode was hosted by Keith Romer and Jeff Guo. It was produced by Emma Peaslee and edited by Molly Messick. It was fact-checked by Sierra Juarez and engineered by Ko Takasugi-Czernowin. Alex Goldmark is our executive producer.

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Transcript

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0:00.0	Support for NPR comes from NPR member stations and Eric and Wendy Schmidt
0:05.2	through the Schmidt Family Foundation working toward a healthy,
0:08.8	resilient, secure world for all. On the web at the Schmidt.org.
0:15.0	This is Planet Money from NPR.
0:20.0	David Rashid had worked setting up and running Auto Parts factories for the better part of two decades
0:26.2	when he got this job offer that would launch him on a very strange journey.
0:31.3	Some friends of mine called me up and asked me if I could help them out with a business
0:35.3	that they had invested in that made power steering hoses.
0:39.4	These hoses, they're skinny, they're made of rubber and and steel and they're vital to the power
0:43.8	steering system in your car and that is about as technical as we're gonna get for
0:48.1	now that's about as technical as I think I can't anyway David's friends who offered him this new job, they worked for a private equity fund that had just made this big investment in a company called Clues and Edelman.
1:01.0	It had plants in both the US and Mexico.
1:03.4	So when you were brought on, what was the mission that they gave you? What were you asked to do?
1:08.8	Fix it. Fix what? Fix the trend.
1:14.0	The downward trend.
1:18.0	Plusenetleman was struggling.
1:20.0	A Chinese company called Chingdao Sunsong had started selling their own power steering hoses and their prices were so low that they were taking away customers.
1:30.0	David takes the job and he gets to work. He figures out how to make the company more efficient
1:34.5	in all these different ways.
1:36.2	You know, we worked on bringing the inventories down,
1:38.6	we worked on consolidating two manufacturing facilities
1:42.3	into one.
	...

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