Global Trade - a blessing or a curse?

How can we determine if global trade is good or bad for the US?

The balance of trade numbers determine if global trade is helpful or not to our economy.  Ideally, trade is a win-win for all parties if exports and imports are roughly equal. The fact is the US has a GIGANTIC balance of trade deficit. In 2007, the US had a balance of trade deficit of $700 BILLION. See  US trade deficit chart.

Global trade has grown throughout modern history. Country A exports products to country B that they don’t have and in turn, country B exports products to country A that they don’t have. In recent years, the US has negotiated trade deals with many nations, which, in theory should be helpful to every nation’s economy. In reality, different nations engage in unfair trade practices against the US that has given them an unfair advantage that has proven to be extremely harmful to our economy and our standard of living. 

Arguments in favor of the current trade policy of the United States

There are 2 sides to the trade issue as it pertains to the United States. On one side, the fact is that products imported from China and other countries cost a lot less than if the same products were made here in the US.  All these electronic gadgets we love to buy would be much more expensive if they were made here.  In addition, some electronic products are superior to what could be produced in the United States.

Arguments against the current trade policy of the United States  

Global trade was never intended to de-industrialize a nation, yet that is exactly what is happening to the United States. If this trend continues, we will continue to lose manufacturing jobs. In fact, we are now losing more and more high tech jobs as well.  We cannot continue down this road of more and more manufacturing and high tech jobs being sent out of the country. We cannot continue to export over $700 billion of our national wealth to other countries. The issue is becoming a life and death struggle for our economic survival. Our government’s refusal to crack down on unfair trading practices - both Republican and Democrat - has reaped a lack of good paying jobs, dying towns and social instability for families unable to make ends meet. Global trade has benefited the rest of the world, but not us. Global trade is a net loss for the US.

The US is at a distinct disadvantage in global competition. American workers are asked to compete in an unfair environment against foreign workers who make only a fraction of a living wage and are employed by companies that have few, if any, responsibilities to the environment or the long-term security and well being of their employees. Industries in many foreign countries are subsidized by their governments. China is by far the worst offender, taking millions of American jobs by cheating on trade. China’s state-led modernization effort uses China’s massive low-wage labor market to lure foreign investment from multinationals, while demanding the most advanced technology in return. China's economic policy towards the US is nothing less then economic warfare.

Bringing some of these jobs back to the US - and having AMERICANS (not illegals) do them - is essential to our long term economic well being. It is also essential for the world economy. The US consumer (and consumer debt) propels the world economy to a large extent. A recession in the US would effect the world economy as much as the domestic economy. 

How the US lost its competitive edge against the rest of the world

There was a time when the US economy ran the world. After WW2, industry changed from quality to planned obsolescence. This mentality was in large part a bitter memory of the depression, when people bought a quality made US product and kept it forever. One of the reasons the depression lasted so long was that people weren’t buying and money wasn’t changing hands. Since the 1960s, American jobs have gone overseas for a combination of reasons - incessant union demands, litigation and increasing environmental regulations. All of these issues must be dealt with to bring jobs back to the US.   In addition, our efforts to help the rest of the world to get an education and reduce poverty (and communist revolutions) have paid off.  Many people in the rest of the world are now as educated and as smart as we are. Even so, the US still has the world’s most efficient, innovative economy.   American education has been in decline for decades due to liberals changing the way we learn. These changes have had a profoundly negative impact on the quality of American education (see “public education.”

How NOT to solve our trading problems

There are things we can do and things we should NOT do. We must not revert to Protectionism, which in the long run will kill our economy. Continuing to lose more and more good jobs will kill us as well. Demanding fair trade is not protectionism.  We need to concentrate on the primary threat in predatory trade practices - China. The reality is we have been in a trade war with China for 20 years and China is the only one fighting! We refuse to fight back. If we don’t fight back soon, there won’t be any economy to save. We NEED a trade war with China until they play fair.

How to bring fairness back to US trade practices

1) Many products imported by China are below cost. It is time for a trade war with China. We should evaluate the true cost structure of foreign imports by using current raw material and semi-finished product cost to determine if products are being imported below cost.  By enforcing fair trade rules that are now on the books we can bring nations that engage in predatory trade practices (mostly China) into line.

    The US should coordinate a united front against China with our allies around the world. With the strength of numbers we can force China to adopt fair trade practices.

    When a product is imported below cost, the US has 2 options. 1) Impose a large fine against the company. If the company does not cooperate, their products will be blocked at the port of entry into the US. We can also take this company to the World Court for a ruling. 2) If all the products in a certain sector from a particular country (for example: motorcycles, tires) are being imported below cost, an immediate tariff will be placed on all of those products being imported from that particular country. Unfair trade is creating massive movement of business to China that does not make economic sense and will kill the American economy in the long run.

2) China produces a large percentage of the world’s consumer goods. We need to break up the China monopoly. Start to move jobs to other countries. As we transfer production to other countries, we will have more leverage with China.

3) Any product made outside the US must be in large print for all to see and displayed prominently.

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Go to   US trade deficit to see the history of our balance of trade numbers
Go to  US government debt holders for a list of countries that finance the US debt.