Editor: I think that Professor Winter Nie missed the mark in her column from Wednesday Feb. 8. She stated that China would win a trade war with the U.S. In fact, we already lost the trade war.
The trade deficit with China in 2016 was $347 billion. The deficit has been over $300 billion each year since 2010. The deficit keeps growing because imports are rising faster than exports. China has the world’s largest foreign currency reserves at slightly under $3 trillion, while its gold reserves rose to $71.3 billion at the end of January. The U.S. had foreign currency reserves of only $119.6 billion as of April 2016. We are not even among the top 10 countries.
Over the last 10 years, we lost 3.2 million jobs to China. Three quarters of those jobs were in manufacturing. If President Trump slapped a tariff on China, many of those jobs would come back to the U.S., and the trade deficit would go our way, allowing the government to pay down our $13.6 trillion debt. Unless we turn the trade deficit in our favor, our taxes must be raised. The debt won’t go away by itself.
Every American owes $154,161 of the national debt; and it is rising by 7 percent a year - faster than our wages. I guess that I will have to break into my piggy bank to pay my share - right!
President Trump has to negotiate a deal with China so that China will buy more U.S. goods, or he must increase tariffs. A lower standard of living allows companies in China to pay lower wages to workers, plus the monetary exchange rate is partially fixed to the dollar. This means many American companies can’t compete with China’s low costs. As a result, U.S. jobs are lost.
Many people believe that if there are higher tariffs on goods from China, the cost of goods will go up. What they are missing is that if the prices from China are higher, U.S. companies will be able to manufacture and compete here in the U.S., creating more jobs.
In turn, Americans will have more money to spend driving the economy upwards; and if Congress institutes a balanced budget, the debt can be paid down. If the debt is paid off, our taxes will go down, making up for the higher cost of goods.
It’s a win-win.