One of the primary functions of government has always been the protection of property and wealth. Today’s federal debt is nearing $20 trillion. Additionally, the U.S. runs a trade deficit of hundreds of billions of dollars each year. Essentially, America has maxed out her credit cards and continues to purchase, risking complete economic collapse and inability to pay debts as no time since the Articles of Confederation.
Exacerbating the dilemma, many of her trade partners, including China, manipulate their currency, making it impossible for U.S. manufacturers to compete. Essentially, the currency is artificially deflated compared to U.S. dollars, so when a Chinese manufacturer makes a sale, earning in dollars, these dollars become even more valuable in the domestic market, allowing for much greater purchasing power within China than the equivalent dollars in the U.S. would. For example, say a Chinese manufacturer produces a steel beam for sale in the U.S. The market value is $100, so revenue returns to China, and $100 become ¥700. Supposing the manufacturer wanted to convert this money into food for his workers in America, $100 would purchase enough for one person for 1.5 weeks. But because of currency manipulation, ¥700 would purchase 3.5 weeks of food in China.
U.S. subsidizes China’s human rights violations
Not being able to compete on pricing is the disaster of U.S. trade policy, a disaster made worse by the additional labor costs U.S. manufacturers see to pay for environmental concerns, health care, and pension plans for employees. Of course, protecting the environment and taking care of employees are good things, but if other countries play by different rules, there is no way to compete. Plus, by favoring nations who completely disregard human rights and environmental issues, the U.S. is supporting these practices.
A corollary can be drawn between British textile manufacture and antebellum cotton production in the Southern United States. Though chattel-slavery was made illegal in Britain in 1102 CE, she directly benefited from the cheap trade of cotton – subsidized by slavery – with Southern plantation owners until 1860 CE. This gives 19th century Britain culpability for chattel-slavery in the U.S.
So, too, is the U.S. culpable for taking the benefit of cheap Chinese goods – subsidized by human rights and environmental violations – by running billions of dollars in trade deficit with China.
Why would Trump’s policy benefit the U.S.?
For the first 100 years of U.S. history, there was no federal income tax. The primary source of revenue for the federal government was tariffs on imported goods. Although there are some good reasons to encourage free trade, as outlined in Adam Smith’s “On the Wealth of Nations,” the fact that countries manipulate their currency and subsidize production with human rights and environmental violations show our current trade policy is not free, as these are essentially bounties offered to manufacturers. By implementing tariffs on imported goods and renegotiating trade deals, Trump’s trade policy will reset the balance so that massive imports will generate massive revenue for the treasury and make pricing more competitive for domestic manufacturers to compete in the home market. #Donald Trump #Foreign Policy