Pay no attention to that trade deficit behind the curtain.

 

“It’s difficult to applaud thirty years of trade policy that eroded American employment, while enriching the nation [China] that is currently installing missile batteries in the formerly free waters of the South China Sea, and telling the world to prepare for the rise of a new hyper-power, as the old one [the U.S.] collapses into an exhausted welfare-state heap.” (Source: “This GIF Shows How China Trumps the U.S. on Trade” — HowMuch.net, 03-23-16)

Trade deficits lead directly to U.S. job losses, by flooding U.S. markets with foreign products. When U.S. consumers are buying foreign products, it means that American-made products are sitting on store shelves, unsold; and are eventually marked down to lower prices. Those lower prices bring less profit to U.S. companies. Less profit means that there’s less money available to grow a company — or even to maintain its current size. As the situation worsens, workers are laid off from their jobs, and many of those companies go bankrupt.

“Since the North American Free Trade Agreement (NAFTA), more than 57,000 U.S. manufacturing facilities have closed and five million U.S. manufacturing jobs–one in four–were lost …” (Source: Public Citizen)

The U.S. steel industry is facing a serious crisis from foreign competition & overcapacity, especially from China, Japan, India, Turkey, and Korea.

• U.S. steel production fell 27% in 2015, from 2014 levels.

• The industry laid off 12,000 workers in 2015.

• The Committee on Pipe and Tube Imports (CPTI) reported 4,000 layoffs in its sector in the past year.

(Source: Inside U.S. Trade, 03-31-16)

Clearly, trade deficits are important, and detrimental to the health of a nation. But did you know that there are many other ways that a foreign country can harm the value of international trade, exacerbating U.S. job loss and corporate bankruptcies? Currency manipulation, subsidies, VAT taxes, BAT taxes, cheaper foreign labor, lower foreign product quality standards, foreign government loans to industry at below-market rates, and lower foreign income taxes compound trade-related U.S. job losses. Most of the situations that I just mentioned are only perpetrated by foreign countries, and never perpetrated by the U.S.!

I don’t know where the term “free trade” came from, but it’s certainly not related to “fair trade”! When it comes to international commerce, the deck has been stacked against the U.S. for many decades.

It’s no wonder that both the U.S. Chamber of Commerce — a very strong proponent of the Trans-Pacific Partnershp (TPP) trade agreement — and members of Congress, are vocalizing their concerns about the ability of the TPP to be ratified in the U.S. They’re well-aware that voters are catching on to the direct correlation between trade agreements, job loss, a severely weakened manufacturing economy, and the disappearing middle class in America.