Today is the first class in our new four-class set. We will continue with our collocations. Our reading today is about copying Korean pharmaceuticals. The vocabulary words will come from our reading. Please be able to recognize them in class. 

For our listening exercise, we will listen to a story by Planet Money. It is about tariffs. I included the transcript, but I want you to you to listen! Please listen first or listen and read. For the listening, I have included one question. If you want to write a paragraph about the question- I will edit it for you. 

Vocabulary

• equivalent- (adj) equal in value, amount, function, meaning, etc. (noun) a person or thing that is equal to or corresponds with another in value, amount, function, meaning, etc.
• tangible- (adj) perceptible by touch. clear and definite; real.
• flock- (noun) A large group of birds or animals that gather together. A lot of people. (verb)  congregate or mass in a flock or large group.
• derive - (verb) obtain something from (a specified source). arise from or originate in (a specified source).   

Click HERE for the reading

Listening Question: How do the tariffs on Chinese goods affect Eric's antique business. Is it directly impacting China? 

ELIZABETH KULAS, HOST:

Stacey.

STACEY VANEK SMITH, HOST:

Elizabeth Kulas.

KULAS: I'm going to call it. It's only September, but I already think I can quite confidently say...

VANEK SMITH: Yes.

KULAS: ...2018...

VANEK SMITH: Yeah.

KULAS: ...Year of the tariff.

VANEK SMITH: We are having a tariff moment, for sure.

KULAS: And I feel like trade with China is at the core of a lot of that tariff talk.

VANEK SMITH: That's true. There have been two rounds of tariffs with China already this year. Fifty billion dollars of Chinese goods are currently affected. And the U.S. is now talking about tariffs on $200 billion additional worth of imports, and that could apply as soon as this week.

KULAS: And if this latest round happens, it means that by value about half of the goods imported from China to the U.S. could attract an extra 10 to 25 percent tax.

VANEK SMITH: And with every new round of tariffs, the office of the U.S. trade representative opens up the floor to American companies. So if a company has a concern, it can reach out. It can go to Washington, D.C., and it can state its case at a public hearing.

KULAS: Almost 350 people appeared at this latest round of hearings. They ended last week. In fact, so many people responded that they had to double the amount of hearings they'd originally scheduled. But they were still sticklers for time.

KATIE CONOVITZ: It was a little bit of a high school debate content, in the sense that the yellow and red light went off.

KULAS: Katie Conovitz was there to represent her company TwelveNYC. Like everyone else, she had five minutes to seek an exemption from the tariffs. And Katie's company develops products for fashion companies, beauty brands - the kind of stuff that you get at like a promotional event or like a gift with purchase when you like buy a lipstick.

VANEK SMITH: Which is usually the reason I buy the lipstick in the first place.

KULAS: Exactly. This stuff is like high-end swag - really, really nice.

VANEK SMITH: This is THE INDICATOR. I'm Stacey Vanek Smith.

KULAS: And I'm Elizabeth Kulas.

VANEK SMITH: Today on the show, one little industry gets swept up in a huge wave of proposed tariffs, so it heads to Washington to fight for its survival.

(SOUNDBITE OF MUSIC)

VANEK SMITH: This latest kind of massive round of proposed tariffs started life like all tariffs do - as a list of products. And this list is published in a tiny, tiny font and runs over 100 pages. There is a lot of stuff on there. And right at the very bottom, there is a kind of anomaly.

KULAS: Your two line items are literally the last two things on the very last page. Did you - have you seen it?

ERIC ZETTERQUIST: I had seen it. And that made me very happy because it would be very easy to erase those, and nobody would notice a gap.

KULAS: You could just snip off the last two rows. That'd help.

ZETTERQUIST: (Laughter) That's right.

KULAS: This is Eric Zetterquist. He appeared in Washington a few weeks back for his business too. Eric is a dealer of Chinese antiques. That's what's covered by those last two things on the tariff list. I met him at his gallery on the Upper West Side of Manhattan. And Eric is really generous with his knowledge. Like, when he pulls out his tea vessel from the 13th century, and, you know, I have a little go at my dealer talk.

It's a beautiful - like a jade green.

I know what Eric really wants to tell me is that this is a classic Chinese Celadon from the Yuan dynasty. But he's really patient, and he breaks down for me.

Did I just pain you with that?

(LAUGHTER)

ZETTERQUIST: No, I'm just trying to picture something modern. It is the size of a large cereal bowl and stands on three legs.

VANEK SMITH: Oh, the cereal bowl - the classic the classic art speak of cereal bowl. I love that.

KULAS: With three feet - don't forget the three feet.

VANEK SMITH: Eric specializes in Chinese ceramics like this. And he has been dealing in this stuff for almost 30 years. And for him, putting a tariff on an item like this just doesn't make much sense.

KULAS: For one thing, American tariffs might be intended to protect American industries and maybe to discourage those industries, like manufacturing, from going overseas.

VANEK SMITH: But American antiques probably aren't going to be undercut by Chinese antiques because Americans, you know, didn't produce any Chinese antiques. So there's no direct competition in this market, and the tariff doesn't help here.

KULAS: Another argument that, you know, you might put forward for a tariff is, well, it helps to ensure that Americans have a competitive edge in a given industry today. But Chinese antiques or American antiques, we know they are not being made today - right? - by definition...

VANEK SMITH: Hopefully not.

KULAS: Yes, exactly. Or you're getting really ripped off.

VANEK SMITH: Exactly.

KULAS: By definition, you know, they're made centuries ago. So the tariff doesn't really seem to apply that well either.

VANEK SMITH: Finally, tariffs might be used to reduce the amount of products being imported from somewhere like China. But Eric says the really weird part in all of this is that China hasn't really allowed foreigners to export antiques outside of the country for over 50 years. So in general, the things that dealers like Eric can bring into the U.S. have been purchased from another country not from China.

KULAS: Like that tea vessel - that size-of-a-cereal-bowl tea vessel.

VANEK SMITH: Yes.

KULAS: Eric actually bought that in Japan a couple of years ago.

ZETTERQUIST: So this piece, having been in Japan for most likely 600 years, I would have had to pay a duty on this of 25 percent because China is its country of origin.

KULAS: That's quite remarkable.

ZETTERQUIST: Yes, and absurd.

KULAS: It was made eight centuries ago. But the fact that it was made in China eight centuries ago means that, if these tariffs go ahead, Eric still has to pay tax on this kind of item when he brings it into the U.S.

VANEK SMITH: Retroactive, man - that is a retroactive tax.

KULAS: Way back - just keep on going back.

VANEK SMITH: So you could say this proposed tariff does not make a lot of sense.

KULAS: Probably not.

JAMES LALLY: There's no punitive effect on China because they prohibit the export of Chinese art.

VANEK SMITH: James Lally is a dealer of Chinese art and the former president of Sotheby's in North America. He says these tariffs play right into the hands of the Chinese government. They reinforce China's policy of creating a closed market for Chinese buyers.

LALLY: I have never in my 45-plus years of art dealing gone to China and bought an object in mainland China and exported it.

KULAS: Because dealers like James and Eric have to go and buy this stuff from countries other than China, those markets are the ones that are going to be affected by the tariffs.

VANEK SMITH: And many of those markets happen to belong to U.S. allies - Japan, South Korea, Europe, the U.K.

KULAS: So putting a tariff on Chinese antiques, it actually hurts sellers in those countries that you just said. And, of course, it will hurt American buyers and dealers who want to purchase this stuff.

VANEK SMITH: If no exemption arrives, James says his whole business would be threatened.

LALLY: People seem to think that antique collectors don't pay attention to prices. Nothing could be further from the truth. It's the same as anything. If you have a chance to buy a unique and special object, you might get carried away occasionally. But with the other 80 percent of the market that is good but not irreplaceable, the price mark makes a big difference.

VANEK SMITH: James says the big auction houses can use a workaround. They can send these items to other markets, like Hong Kong or London, where the tariffs won't apply. But he says this will hit small American dealers, like him and Eric, very hard.

KULAS: Eric didn't want to discuss the price of that particular tea celadon that he showed me. But he did say that something like an A-quality - what he called Longquan tea celadon - would cost around a $100,000 hundred to import. So with the tariffs, it would cost $125,000 to actually get it into the country to get his hands on it.

VANEK SMITH: And Eric says most if not all of that increase would just have to be pushed on to buyers. He says his margins aren't big enough to absorb that. So he says demand from American buyers is likely to drop way off.

KULAS: And international collectors and museums that buy from him right now, they're probably just going to turn to dealers in other countries where they don't have any tariffs to deal with. And now after almost 50 years in the Chinese art business, James, his colleague, says he doesn't have a backup plan. He thinks his best option might just be the orderly selling off of his existing inventory. But the thing that really worries both of them is just this much bigger cost - one they think could have a really long tail - because they say this isn't just a conversation about tariffs. This is about an important shift in American cultural policy and life.

ZETTERQUIST: America has had a tradition of not taxing original art and antiquities from foreign countries because we are a very young culture, and we benefit from the inflow of this material.

VANEK SMITH: And this is something that both Eric and James think really matters.

LALLY: I mean, it's unprecedented. I could say the only time we've had this kind of severe restriction on Chinese art was during the McCarthy-era. And during that period, American museums missed many, many opportunities. And it's a very sad day when we begin restricting things on a country-by-country basis.

VANEK SMITH: As of right now, the U.S. does not tax the import of art or antiquities or books from any country.

KULAS: And there's an anxious group of museums, collectors and dealers across the country who are hoping that Eric's five-minute testimony will help it stay that way.

VANEK SMITH: Hopefully he can get it all in before the red light.

KULAS: Yeah, exactly.