Steel and Aluminum Tariffs Will Help Rebuild American Manufacturing

March 7, 2018
We have been losing this trade war, and it’s about time that we stood up and fought back.

There has been quite a furor in financial and political circles since President Trump announced the that he would impose tariffs on steel and aluminum imports from all countries. There has been an outcry that it would raise consumer prices, end “free trade” and start a trade war. The fact is that we have been in a trade war with China for nearly 20 years — from when China was granted Most Favored Nation status (PNTR) in the year 2000 under President Bill Clinton. We have been losing this trade war, and it’s about time that we stood up and fought back.

China has been cheating on what they agreed to do to attain their PNTR status within the World Trade Organization. They have dumped products in the U. S. at below market prices to destroy American competition. The Chinese government has subsidized their steel, aluminum and other industries. They have manipulated their currency to make it undervalued compared to the U.S. dollar. They have stolen the intellectual property of American companies. They have forced American companies to transfer technology to Chinese companies in order to establish manufacturing facilities in China. This hasn’t been free trade or fair trade.

The U.S. trade deficit with China has increased from a small deficit of $6 million in 1985 to $375.2 billion in 2017. China represented 40% of our total trade deficit in goods of $810 billion in 2017, and our trade deficit has already increased at a record pace for January 2018.

As I pointed out in my December 7, 2017, IndustryWeek column, “How Trade Policies Led to the Decline of American Manufacturing”: “As a result of the escalated trade deficits from 2001 to 2010, the U.S. lost 5.8 million manufacturing jobs and 57,000 manufacturing firms closed… our domestic supply chain has weakened…We even lost whole industries…” This number of jobs lost represents about 30% of the manufacturing workforce we once had. Actually, “the number of jobs in manufacturing has declined by 7,231,000--or 37%--since employment in manufacturing peaked in the United States in 1979, according to data published by the Bureau of Labor Statistics.

In the past three days, I’ve listened to conservative radio talk show hosts lambast President Trump’s National Trade Director, Peter Navarro. I’m personally acquainted with him because of residing in San Diego where he resided for many years. I even remember when he ran for mayor of San Diego in 1992. What these talk show hosts and their guests fail to mention is that he was a professor of economics at the University of California, San Diego, for many years, and was professor of economics at the University of California, Irvine, prior to becoming part of the Trump administration. He knows what he is talking about.

Navarro was one of the first authors to point out the threat that China is to the U.S. I’ve read two of his three books: The Coming China Wars, published in 2008, which I read when I was writing my own book, Can American Manufacturing be Saved? Why we should and how we can. Then I read the second book that he co-authored with Greg Autry, Death by China, in 2011. Greg Autry has spoken at several of the manufacturing summits I participated in producing in southern California on behalf of the Coalition for a Prosperous America. Greg Autry and I also served together on the board of directors for the American Jobs Alliance from 2011 – 2016.

Navarro and Autry outline the eight ways China cheats in trade in cleverly worded phrases:

  1. The Export Subsidies’ Dagger to the Heart.
  2. The New “Great Game”: Chinese Currency Manipulation
  3. They Think It’s Not Stealing if They Don’t Get Caught.
  4. Trashing China’s Environment for a Few Pieces of Silver
  5. Maiming and Killing Chinese Laborers for No Fun but Lots of Profits
  6. The Neutron Bomb of Export Restrictions
  7. Predatory Pricing, Dumping and the Dragon’s Rare Earth Cartel
  8. Goodness Gracious, Great Walls of Protectionism

If you haven’t read either of these books, I can highly recommend them, and they are still available on Amazon.

The tariffs on steel and aluminum are long overdue and constitute only a single step in balancing our trade deficit. I’m delighted that President Trump is keeping his campaign promise of imposing tariffs on steel and aluminum. I was happy when he withdrew the U. S. from the Trans Pacific Partnership Agreement as I had written more than a dozen articles about the dangers of that agreement to the U. S. It would have been the “nail” in the coffin of American manufacturing.

There are many more policies we need to put in place to eliminate the trade deficit and restore manufacturing jobs to create prosperity. I have made recommendations in the last chapter of my new book, Rebuild Manufacturing – the Key to American Prosperity, based on the research I have done for the articles I have written in the past six years as a columnist for IndustryWeek, along with many recommendations that have been made by the board of directors of the Coalition for a Prosperous America, of which I have been a member since 2011. Check out these issue papers on their website.

We can win this trade war if we have the same kind of courage and insight we had when we won World War II and the Cold War with the Soviet Union with the help of our allies. Remember, China has a written plan to become the Super Power of the 21st Century. If we lose this war, we may lose our country.

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