This Wall Street Journal op-ed by Bobrick Washroom Equipment Inc. president Mark Louchheim provides some counterpoint to the whining of free trade advocates about Trump’s tariffs:
The conventional wisdom about manufacturing is wrong. It isn’t a lost cause, and the U.S. isn’t destined to become a pure “service economy.†In fact, new technologies including numerical controls, lasers and robotics have propelled a renaissance in American manufacturing. My Los Angeles-based bathroom-accessory and toilet-partition company has benefited from this, investing continually in our facilities, technology and best practices to remain globally competitive.
Nonetheless, our company is effectively shut out of China—a vast and growing market—due to its 25% tariffs on our exported products. In contrast, duties on competing goods from China to the U.S. range from 2.5% to zero. I love free trade, but fair trade is also important.
President Trump’s tariffs may harm major multinational manufacturing companies that have significant operations in China and companies that import products from China. But for many small and medium-size manufacturers such as ours, which create most of our products at home, the tariffs have minimal impact. There is no better time to level the playing field with China than now. The economy is growing quickly and it can absorb the short-term pain from reciprocal tariffs.
IMO Trump’s “trade war” has been remarkably mild, so mild, indeed, that I can’t help but think that they’re more a bargaining ploy than anything else. They only look harsh because he follows three successive presidents who’ve largely been supine with respect to China.
We should be lobbying for China’s ouster from the World Trade Organization on the grounds that it has never met the commitments it made to be granted membership. We should be demanding compensation for all of the intellectual property theft, explicitly against WTO rules, that China has engaged in, whether through compulsory technology sharing or industrial espionage. We should be demanding that China actually enforce its own environmental and workplace regulations rather than just issuing press releases about them.
I think if one had asked 100 trade/political/economic experts from the US or China at the beginning of the year the idea that the US would have tariffs on approximately half of Chinese exports by the end of the year they would have laughed.
Hindsight is 20/20; but I doubt anyone thinks what’s going on is “mild” anymore.
It reminds me of the complaints that the U. S. response after 9/11 was too harsh. Nuking Riyadh would have too harsh. Expelling all Saudi nationals would have been too harsh. What we actually did was pretty mild especially when you consider that we responded to the attack on Pearl Harbor in which 2,300 Americans were killed by killing 2 million Japanese.
As you pointed out we are not experiencing a mostly-on-paper economic boom but one with an increasing amount of manufacturing involved, which won’t vanish into thin air when stock prices drop. As a result any comparison of this boom to ones the last several ones will be incorrect.
As far as the tariffs are concerned, they were always a negotiating ploy. They can be removed as fast as they were imposed.
Forcing China’s ouster from the WTO would be counterproductive. The intellectual property lost is lost. What Trump is trying to do is to even out the trade imbalance and prevent China from stealing any more trade secrets. Since stolen knowledge is what drives China’s technological progress, it comes out to a win for the US no matter what.
“It reminds me of the complaints that the U. S. response after 9/11 was too harsh.”
If you count the Iraq War as par to the response, it wasn’t too harsh, it was too stupid.
Steve
Iraq is now a Democratic Arab Republic smack dab in the middle of the Arab world, about as peaceful as America in 1866, we can hope.