Pro-Tariff Argument: Tariffs Save American Jobs

Since Joe Biden helped China enter World Trade Organization (WTO) in 2001, the US has lost 60,000 factories and permanently lost 4 million jobs. The basic laws of economics say imports happen when the world price is lower than the domestic price of a good. If it were cheaper locally, there would be no need to import it. This is probably not a shock to most people, but the Chinese products that flood American retail outlets are there because they are cheaper than domestic products. Because the cheap Chinese products are available, Americans buy those, instead of more expensive American product which results in factory closure and loss of American manufacturing jobs. Additionally, the US runs a trade deficit with China. We import more than we export. The sheer volume of cheap, Chinese products has decimated US manufacturing.

Donald Trump’s solution to the China-trade problem was to slap huge tariffs – in the hundreds of billions of dollars – on Chinese imports. A tariff raises the price of imports, approaching domestic price levels. This causes Americans to buy American products, rather than Chinese products, which will in turn, increase demand for American products, causing the expansion of factories and an increase in American jobs. It does mean prices will go up, but the money will be going to American manufacturers and paying the salaries of American workers.

Many prominent economists, such as Nobel Prize winners Milton Friedman and Paul Krugman, are staunch proponents of free-trade. They argue that with free trade, everyone is better off, which they say is for two reasons: first, while a small number of manufacturing workers lose their jobs, a large number of consumers benefit because they can buy more goods. And while this is true, buying goods is not how countries or people get rich. It might make more sense to judge our economic policies, by the amount of wealth it creates for citizens. Second, they tell you that although domestic factory workers will lose their jobs in import industries, they will replace those jobs with work in export industries. But the US has a massive trade deficit. We import much more than we export. So, when workers in import industries lose their jobs, there are no export jobs for them to go to.

The US is the world’s largest exporter of services and jobs in services pay a lot of money. The US exports accounting and auditing, marketing, engineering, banking, and other services, which pay extremely well, but the workers who lost their manufacturing jobs are generally not qualified to work in the service export sector. So, no, their jobs are not replaced. And while the free-trade crowd tells you that there has been no appreciable increase in US unemployment since China joined WTO, we also know that wages have been flat and upward mobility has decreased. The reason is that people who lost well-paying manufacturing jobs were forced to take lower-paying jobs. They are still employed, but earning less and have little or no chance for advancement.

Laws of Economics: Manufacturing Will Come Back

You have been told that Americans don’t want to work in factories; this is untrue. Americans, like all other human beings, will work in any job if the pay is high enough. And factory work generally pays dramatically better than minimum wage.

You have been told that American manufacturing is not coming back; this is also untrue. The basic laws of economics say that if an activity makes money, people will do it. If entrepreneurs could make money by opening factories and manufacturing goods, they will. The thing preventing them from doing it right now is cheap Chinese imports. By driving up the price of Chinese imports, through the use of tariffs, we can encourage domestic manufacturing.

Joe Biden said he will “fix” the China relationship. And this author/economist believes him. All he has to do to fix the relationship is repeal the tariffs and give China everything they want, as he did when he was Vice President. People say Trump ruined the China relationship; maybe, but Trump stood up to China, demanding fair trade terms. And if demanding fairness ends a relationship, then that relationship cannot stand. The basic law of economics says trade can only happen if both countries will be better off. Trump blocked much of the trade with China because it was not making the US better off.

Joe Biden said he will renegotiate the phase one trade deal. Why did China not make good on their promises under the phase one trade deal? Was it because China thought the deal was good for China so they reneged? Or, was it because the deal was good for the US, so China reneged? And how can Joe Biden get China to honor the phase one trade deal? Simple: make the deal better for China. Basically, the Trump administration has been fighting for the US economy, US jobs, and US independence from China. Joe Biden is promising to make the US dependent on China and to permanently gut US manufacturing and destroy the American dream by squelching upper mobility.

• Author
• Recent Posts

Antonio Graceffo

Antonio Graceffo, PhD China-MBA is a writer and China correspondent for NRN and a contributor to NRN+ Magazine. He worked as an economics researcher and university professor in China for seven years. Currently, he is a China analyst and economics professor in Mongolia. His China economic reports have been featured regularly in The Foreign Policy Journal and published in Chinese at The Shanghai Institute of American Studies, a Chinese government think tank. Based out of Mongolia, he continues work on the US-China trade war and US-Mongolia-China political-economic dynamic.

Latest posts by Antonio Graceffo (see all)

• The China Tariffs Must Stay - November 19, 2020
• Coronavirus: The Left’s Ministry of Truth - October 20, 2020
• Republicans Are The American Party - October 19, 2020