Trade

It’s time to take a closer look at tariffs. First off, the best situation is to have free and fair trade which under the best conditions means no tariffs. If that is so then why do so many countries have tariffs and why is the US entering the tariff scene. The answer is all about the word fair. China wooed American companies by using low prices. Over the past 50 years American companies discovered that they could produce products in China at such low prices that they could even absorb the higher shipping cost and make more money than producing goods in America. How China was able to do this is something that was rarely considered by US companies. To start with their labor cost were cheaper, sometimes even using slave labor but over time that difference narrowed. China did not have the environmental restrictions nor the worker protections that the US has. China used government subsidies to lower production cost and China manipulated their currency to promote cheap exports. All of these things resulted in unfair trade practices. China had a simple plan that worked quite well. They would use the above mention advantages to produce products below manufacturing cost and flood the world markets with these cheap goods. In time they would run competitors out of business. This hurt US manufacturing. One example is the steel industry. Before 1970 the US made more steel than any country in the world. This year the US will make 80 million tons of steel and China will make one billion tons. This means that the steel used in the US to produce US cars is made from Chinese steel. This same thing happened in many products and the US lost much of its industry. This is about to change as the end of globalization is bringing industry back to America. Tariffs are being used to accelerate this process. The establishment in the US has profited handsomely from this global trade at the expense of the US worker and they are fighting to maintain the status quo.