By FRANK WATSON
Contributor 

President Trump putting Chinese exports on hold

Guest Commentary

 

Last updated 6/20/2019 at 9:06am



The criticism of President Trump’s tariff war continues to grow. The attacks are mostly centered around the American consumer. I understand the concern. I don’t want the prices at the checkout to be any higher than they absolutely need to be. I enjoy a good bargain as much as anyone. But consumer thinking is short term. Could our President actually be looking out for the long term best interests of our nation?

A few years ago, I was asked to list the most serious problems facing our country. First on my list was our growing debt; closely followed by the increasing exportation of wealth. Wealth is generated by increasing the value of products. A farmer generates wealth by growing wheat. The value is increased when the wheat is milled, more value is added when it is baked and even more when the bread is transported to the market place. The process of adding wealth stops, however, when the loaf is consumed. The consumer is the only link in the chain that does not add wealth. The same is true for other goods. Cotton is processed, spun into thread, woven and eventually becomes a T shirt. When the shirt is consumed, the price of the shirt adds wealth to all but the consumer. In the last fifty years or so, we have changed from a world wide supplier into an international consumer. As we consume goods that are produced overseas, we export our wealth. Not long ago an economist coined the term “Chimerica”. China produces and America consumes. Both nations benefit in the short term, and each is essential to the other’s economy.

In the long term, however, the picture is not as rosy. We import many more goods and services than we export. Our annual trade deficit is currently more than 600 billion dollars and growing. Two thirds of that deficit is with China! That scares me. China thinks long term and doesn’t play fair. We continue to expect our trading partners to be honest, honor their agreements and follow accepted business ethics. That doesn’t work with China. I remember when our tool and die industry supplied factories around the world. China copied our technology and subsidized their producers to undercut our prices. Our factories closed and China enjoys a monopoly. The same thing is happening in other industries. Our largest export is currently electronics. Access to markets in China includes access to our technology as part of the deal. How long will it be before they subsidize their producers and cut us out of the market? China doesn’t play fair, and our short term vision frequently plays into their hands. I watched a documentary a few years ago exposing American retailers who encouraged US companies to move production to China. The results were predictable: lower prices in big box stores and closed plants in Iowa. The last I heard, the lawsuit between Wal Mart and Rubbermaid is still in the courts.

Wealth is finite. If we continue to export wealth through consumerism, our children will not have the same standard of living we have, and America will slowly decline. I understand why some people are enthusiastic in their dislike of our President. He is about as diplomatic as a pet rattle snake. Sometimes, however, his basic goals are right on the mark. There are alternatives to dealing with China. They had a monopoly on production of iPhones until Trump’s tariffs forced Apple to find domestic sources. We can be a net producer again, but we must do it before we deplete too much of our wealth through short term consumerism.

Frank Watson is a retired Air Force Colonel and long-time resident of Eastern Washington. He has been a free-lance columnist for over 19 years.

 

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