It looks like we've completely shifted away from the earlier topic of the similarity between deficits/debt circa 1945 and circa 2005.
Which corresponds with the time the trade deficit commenced. The oil embargo certainly put the pinch on our surplus as we were forced to pay higher prices on the spot market for oil.
It may correspond to it, but there are so many factors in the trade deficit that you don't know whether oil was a singular reason or there was a combination of factors. You won't know whether it was or not unless you look it up. Further the price of oil has dropped well below the historical averages, but we still have a historically large trade deficit.
Actually, we ARE currently placing pressure on China to revalue the Yuan. We've threaten a 25%+ tariff on Chinese goods if there is no action on floating the Yuan on global markets by the end of the year.
Pressure and results are different. We also placed tariffs on steel imports; those were ruled illegal under the WTO. We also subsized the cotton industry to a tune of $4B/year. That was ruled illegal. There was an articule posted on SI recently that claimed that Walmart is now 2% of US GDP; the principal supplier to Walmart is China. Go ahead, hit China with a 25% tariff, then watch what happens to Walmart.
Interesting article this a.m. on China and textiles. The whole article is a good read, but I'll extract a small section ...
Despite a two-thirds jump in overall shipments of textiles and clothes from China since quotas were lifted at the beginning of the year, imports from all countries have climbed by only 15 percent, and those from Mexico, South Korea and the Philippines have dropped, according to the foreign trade division of the U.S. Census Bureau. In other words, much of the increased Chinese production is coming not at the expense of American producers, but from those in other countries.
The head of global procurement for Wal-Mart, which last year bought more than $1.5 billion worth of apparel in China, scoffed at the notion that American jobs are at risk because of increased Chinese clothing imports. "The only apparel that's left in the U.S. is sweatshops in Chinatown," the procurement chief, Andrew Tsuei, said during an interview last year....
Chinese apparel and textile factories shed more than 1 million jobs between 1997 and 1999 as the government cut credit to money-losing factories, according to a national trade group. The remaining players have since geared up for the end of the old global quota system, pouring $25 billion into improving their plants over the past two years alone, according to Cao.
This retooling and streamlining has increased the efficiency of China's textile producers, a trend accelerated with the lifting of quotas. Previously, China's factories had to buy rights to export from state trading companies, increasing the price of Chinese goods. The end of the quotas eliminated such payments. In the months since, wholesale prices for Chinese-made blue jeans reaching the United States have dropped by nearly a third, according to Pietra Rivoli, a trade expert at Georgetown University's McDonough School of Business. The wholesale price of cotton underwear from China has dropped by nearly half, and cotton knit shirts have fallen by 60 percent, as volumes of imports have surged. Retail prices have fallen only marginally over the past year, meaning the bulk of the savings is being enjoyed by retailers and wholesalers, Rivoli said.
washingtonpost.com
Great, hit China with a 25% tariff, possibly illegal and hit US retailers, wholesalers and consumers with the results. And move jobs back to Mexico, South Korea and the Phillipines. Those other unnamed countries that are boosting their exports to the US by 15% .... are you going to hit them with a tariff as well? And do you think that China is just going to sit there and do nothing?
This reminds of the carnival game I played as a kid. Most likely you have at least seen it. They gave you this large mallet and you stood in front of a bunch of holes. A creature would randomly pop up and you were supposed to smash it down, then wait for the next creature to randoming pop up and smash it down.
In a world of "free trade" the US loses. We have to be the loser; we have one of the highest per capita incomes in the world. At some point it all comes down to labor rates in varying degrees. Textiles being one of the more labor intensive industries. With all the subsidies and tariffs done for the benefit the US steel industry ... how does the long term health/survivability of the US steel industry look to you?
jttmab |
