John's World: Is the Trade War a "Voluntary Sacrifice" Or Not

April 2, 2019 06:00 AM

From Carlton Nelson in Minnesota, this comment about the trade situation:

“One largely overlooked aspect of the ‘trade War’ with China is the simple fact that the trade agreements that exist have been made by consenting adults.  These are people like you me who have chosen to buy and sell because it is in their self-interest. No one has forced us to buy Chinese-made goods.  It has simply been the decision to get the best deal. The Chinese also look for good deals and if they can buy soybeans without tariffs that are cheaper, they’re just making the best deal.”

I largely agree with this position concerning the requirement to share technology when you manufacture in China. Firms wanting to do business in China to sell to that vast market certainly have known for decades it would occur. If they did not factor in the loss of proprietary technology, they failed due diligence, in my view.

Trade with China has clearly proven to be a massive positive economic gain for all countries involved. In our case, American consumers have enjoyed the significant benefit of much cheaper consumer goods, like textiles and electronics, raising the standard of living for virtually all Americans. Meanwhile, American commodities like grains and meats helped improve foreign diets with their quality and low cost.

That said, more free trade enthusiasts like me should have noticed sooner how profoundly specific sectors were being devastated by Chinese trade policy. The evidence shows more open trade has been an overall plus for both economies, but those businesses that could not compete with cheap labor or relied on protections like patents or copyrights for their profit suffered. Our safety net was insufficient to help them adjust or limited to too few industries.

My regret is in the heady moments of cheap imports, epitomized by the rapid domination of retail markets by giants like Walmart, we did not have the wisdom to enact mechanisms to balance the gains with the pains. It would have been difficult politically, but we who flourished with expanding trade underestimated the power of the those who did not to undo decades of overall global prosperity.

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Spell Check

margaret byrd
4/2/2019 04:33 PM

  I hate our manufacturing went to Mexico & China. I'm happy that some balance might be regained to support American Manufacturing again. Remember one lesson of the Civil War. The South was at a disadvantage in the war as they were an agricultural society and didn't have the strong manufacturing base the North did. If our steel industry goes down for the count who will help us if we are up against the wall? I think Tom has a point about the race for cheap goods that left a load of people on the side of the road no longer able to even house or feed their families. It's a complicated problem.

Larry Buggia
Monmouth, ME
4/10/2019 11:11 AM

  6,500 employees made cast iron engine blocks for GM back in the 1960s. Today 400 employees and robots make all the engine blocks out of aluminum. Farmers now have robotic tractors and milkers. We are at cyber war now with China and Russia and may be loosing! Steel is not as important as teaching our children coding and robotics and real science, but our adults don’t realize this yet.

Dean E Franklin
4/2/2019 04:23 PM

  What should have stopped at a tariff tiff became an unnecessary trade war, with everybody. Tariffs which have stripped Americans of billions of dollars for no good reason. In fact, we have no working trade deals with anyone. We have a President that doesn't understand that we pay tariffs. A great deal maker that has made 1 deal. USMCA. Which hasn't been ratified. A business billionaire tycoon who spends more time golfing and watching TV and tweeting than he does doing the necessary hard work of running our country. Who put family before national security. God help us. We bought it. He broke it and it's not over yet. Not by a long ways.


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