By on September 14, 2009

The Chinese aren’t messing around with this one. On Friday, Obama slapped a 35 percent punitive tariff on Chinese tires. On Monday, a soon as the WTO was open for business, China filed a formal complaint against the United States of America with the World Trade Association in Geneva, China Daily reports.

Under the WTO’s dispute settlement system, the two countries will have 60 days to try to resolve the dispute peacefully, and to pedal back to where they came from. If peace breaks out, China will export its tires, America will sell its cars and chickens. If consultations fail, China can and will request a WTO panel to investigate and rule on the case. If a ruling is reached, both can appeal. The next ruling is final.

China has experience with the proceedings. The United States, the European Union and Canada had taken China to task over spare parts tariffs. China imposed a 25 percent tariff rate on auto parts in 2005, if they accounted for 60 percent or more of the finished product’s value. Normally, spare parts carry a 10 percent import duty. The WTO ruled against China, China appealed, the WTO rejected the appeal. Two weeks ago, China backed down. It was seen as a peaceful signal. It was misread as weakness.

The Chinese mission to WTO said in a statement that the tire ruling “runs counter to relevant WTO rules, it is a wrong practice abusing trade remedies.”

China hopes that “all sides will understand its determination to firmly fight against trade protectionism so as to commonly safeguard the multilateral trading system by respecting WTO rules.”

They won’t roll over. And it won’t blow over unless Obama and Hu Jintao have a beer in the White House Rose Garden, or smoke the peace pipe in Pittsburgh, or do whatever needs to be done to make this thing go away. If it doesn’t, the whole car subsidy thing will come on the table, something the USA and some European countries will try to avoid. Just like Belgium is dragging Germany in front of the EU in Brussels over Opel, a whole globe would like to see the big guys being barbecued for their big wallet bailouts. In a way, this gives Obama a chance to save face. He can tell his United Steel Worker buddies: “Boys, I’ve tried.” Or not.

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50 Comments on “Trade War Watch 4: China Reports USA to the WTO...”


  • avatar
    chuckR

    The world is upside down.

    I’m rooting for the reformed Commies against our unreformed President and his union pals. What a stupid hill to die on.

    Given the time duration in distribution, I wonder if there will even be a significant interruption in exports of these tires?

  • avatar
    shaker

    ” In a way, this gives Obama a chance to save face. He can tell his United Steel Worker buddies: “Boys, I’ve tried.” Or not.”

    Pretty much what I was thinking – the WTO gets some legitimacy out of the deal, too.

    The USWA has spread its wings quite a bit since I was a ‘member’ back in the 70’s – they would probably try to unionize a brassiere factory if they made underwire models.

  • avatar
    Autosavant

    Economics-wise, the CHinese have not been “commies” for 33 years now (since the death of that Econ Illiterate Mao). The Idiot-in-Chief is far more of an econ illiterate than they are.

  • avatar
    kericf

    As much as I agree, the unions are the last people we need influencing our country’s trade practices, this is the ultimate example of the pot calling the kettle black. China is possibly the worst country in the world when it comes to fair trade practices. Them crying to the WTO is about as stupid as it gets. Let me break out my tiny violin.

  • avatar
    CyCarConsulting

    I guess the White House didn’t get the memo. We the Chinese government will finance your out of control debt, in worthless dollars, as long as we can jamb our inferior products up your wazzoo.

    Wazzoo, a Chinese word I don’t understand

  • avatar
    bunkie

    Oh, please.

    First, this can be views as posturing on both sides. China as victim? Give me a break. They’re the poster children for ignoring the rules whenever it suits them.

    But far more disturbing is the fact that the entire history of US-China relations since 1972 has been about hiding the real costs of of US policy at all costs. Yes, we have cheap tires. Hooray! But the long-term cost thereof (and every other consumer good made in China) is an unstoppable decline in US economic power.

    Go ahead, root for the Chinese. It will be good practice for when you won’t have any choice.

  • avatar
    oboylepr

    They’re the poster children for ignoring the rules whenever it suits them.

    China Hmm! If you were to ask certain people in Canada like say softwood lumber producers and a few others who the poster child is for doing whatever the hell suits you, you will get an entirely different answer.

  • avatar
    bunkie

    If you were to ask certain people in Canada like say softwood lumber producers and a few others who the poster child is for doing whatever the hell suits you, you will get an entirely different answer.

    I see that you got my larger point. so-called “Free Trade” is a sham.

  • avatar
    YZS

    For thousands of years, whoever has more money and/or might, and are willing to use it, will get their way. This is no different. We owe them money, and our might is already being over extended on two fronts.

    Either get used to it, or get going and do your part to make it better. Unfortunately, most Americans just don’t have the appetite for it anymore.

  • avatar
    Banger

    bunkie:

    “so-called ‘Free Trade’ is a sham.”

    And the choir said, “Amen.”

    If you’re not checking origin labels on at least the large purchases you make (tires, cars, etc.), there’s never been a better– or harder– time to do so in an effort to buy a few things still made here, by Americans.

    Your reasoning is why I’ve bought everything from an O’Cedar mop to a Speed Queen washer/dryer set. In both those cases (and those are just recent ones I can think of), there was a cheaper alternative– actually, several cheaper alternatives. But practically all were made in China. Very few were made in Mexico, the supposed source of that “great sucking sound” Perot warned us about in 1992.

    Given a choice between the lesser of two evils, I’ll let my dollars be converted into Pesos over Yuan any day. But I’d rather there be no conversion involved, especially with larger purchases like the washer and dryer.

    I know the point about domestic automakers building their cars in Mexico and Canada, yadda yadda yadda. My Ford Ranger was built in St. Paul, Minnesota, and I’ll proudly tell anyone that next time they ask me to help them move their (made in China) appliances.

  • avatar
    mimizhusband

    The President is a whore for the unions.

    Go China!

  • avatar
    NulloModo

    I don’t understand why everyone thinks us owing china money is such a problem – we will pay them if and when we get around to it, and there isn’t a whole lot they can do about it. When it comes to military might, we could reduce china to a third world nation in the time of a week without ever putting a single soldier on the ground. They may have a lot of numbers, but their hardware is primarily outdated copies of Russian designs.

    Not that I think it will come close to that over tire tariffs obviously, this is just a bunch of posturing on both sides.

  • avatar
    MMH

    I’m gonna go with PCH101 a few threads ago on this one; this is about posturing, and is simply the opening round in a larger game.

    Like the guy or not, do we really think that BO would sign this without understanding the big picture implications? Really? The U.S. President, with rooms full of advisors, signed this bill purely for the effing steelworkers union?

    Think bigger. Less gnashing of teeth and pulling of hair. More L-T analysis.

  • avatar
    Atomicblue

    I agree with PCH101 and MMH, there’s more going on here than we’re seeing on the surface. I’m not really a conspiracy theory kind of guy, but this tire tariff just doesn’t make sense unless it’s part of something bigger or more long term.

  • avatar
    gawilliams

    Atomicblue:
    I agree with you — this tariff does not make sense unless it’s part of somehting bigger or more long term. But I cannot think of a single example of the current administration NOT cutting off its nose to spite its face (bailouts, C4C, Obamacare). I’m afraid the tariff is just another in a long line of “what can we do to please a speical interest group today” policies.

  • avatar
    bryanska

    So the Chinese can make tires cheaper and more efficiently?

    Let ’em. Why would I enable a dying American industry to remain unprofitable and uncompetitive, when we should be retraining and reeducating those workers to ply their trades in industries of the American future? If passenger tires have become commoditized (like passenger cars) how long can Goodyear (like Chrysler) be expected to sell their tires as cheap as the Chinese?

    Tire tech for passenger cars is very old at this point. If we don’t need higly skilled American union labor to produce a decent tire, let’s get them to produce something on the rise, not something that’s stable.

    The tires are coming, there’s no stopping them. It’s kind of ironic, that we’re trying to stop the decline of the tire industry in the same way we tried to keep Japanese cars out of the US. It all started with tariffs.

  • avatar

    Nullomodo:
    I don’t understand why everyone thinks us owing china money is such a problem – we will pay them if and when we get around to it, and there isn’t a whole lot they can do about it. When it comes to military might, we could reduce china to a third world nation in the time of a week without ever putting a single soldier on the ground.

    See how easy trade wars can lead to shooting wars? First, it starts in the minds of some people.

    1.) The Chinese have their money in bonds. They can simply sell them. They already lightened up some $25b or so if I recall right. No biggie in the grand scheme of things. But it’s just a click on the computer. Now if they massively unload them, their value will go down. But ..

    2.) As for the military option. you are delusional. Ever heard of nuclear weapons? They have them. Lots of them.

  • avatar
    dougjp

    So I have a choice of which to dislike more, China or the Obama/Unions combo. Tough call.

  • avatar
    bunkie

    2.) As for the military option. you are delusional. Ever heard of nuclear weapons? They have them. Lots of them.

    They don’t have as many as you think. And then there’s the means to deliver them to their intended targets. On that front, China doesn’t even come close to the US or Russia or even Britain or France.

    Not that I’m suggesting, in any way, that nuclear war is a good response to trade imbalances…

  • avatar
    YZS

    Military option: yes, we can level China, and really, the rest of the world, if the right people push the right buttons.

    But just because we can doesn’t mean we will. If it was that easy, we would be done with Iraq, North Korea, hell, we won’t even have to take shit from the Brits or the French anymore.

  • avatar
    davejay

    Oh my goodness, this might be brilliant.

    Consider: during the Bush years, kowtowing to the WTO and the UN was considered bad, very bad, very French, all that stuff.

    So here’s Obama, doing something that we know the WTO won’t like. So what do people do who don’t support Obama OR the WTO and UN?

    I mean, aside from their heads exploding.

    Meanwhile, the WTO will say no, the tariffs will go away, and Obama can say that it wasn’t his fault, it’s the WTO — he tried. And so the unions will likely be appeased.

  • avatar
    CamaroKid

    So here’s Obama, doing something that we know the WTO won’t like. So what do people do who don’t support Obama OR the WTO and UN?

    Exactly! If Obama had caved on this one everyone would be going…”That European Rock Star of an American Hating President” won’t stand up for “Joe the Tire Maker”

    Obama actually is going to insist on “fair trade” and everyone on the right is now cheering for a Totalitarian Communist State. Nice work guys…

    To that I say, if you think that China is so right, and so just, you should move there.

  • avatar
    OldandSlow

    It’s interesting to see folks who oppose the Prez and the Democrats root for China.

    I hope that this isn’t the same crowd that gave us freedom fries. If you think about it, Communist China isn’t exactly a bastion of freedom and liberty.

    Even though I think raising tariffs on Chinese tires is doomed to fail in the grand scheme of things, I hope the message gets out that the US will never be able to import its way to prosperity.

  • avatar
    sean362880

    I’m not sure this is posturing. Even though BO needs UAW support for health care etc., the US International Trade Commision has recommended increasing this tariff 4 or 5 times now.

    Exports of Chinese tires to the US have from 14.6 million tires in 2004 to 46 million tires in 2008. How can predatory pricing, dumping, etc not be involved?

    From the USITC report in July 2009:

    “Furthermore, the pricing data described above show that underselling by the subject Chinese tires has been significant and continuous throughout the period examined and that the margin of underselling has increased over the period. This underselling by the large and rapidly increasing volume of subject
    Chinese tires eroded the domestic industry’s market share, leading to a substantial reduction since 2004 in domestic capacity, production, shipments, and employment during the period examined.”

    http://www.usitc.gov/publications/safeguards/pub4085.pdf

  • avatar

    Again, this military crapola talk proves the point how easy it is to switch people’s minds from a trade war to a shooting war.

    YZS: +1

    Jeez, look at Iraq and Afghanistan: We can’t even win a war against people armed with rifles and explosive belts. Those who fantasize about military options, please report to Bagram Airbase for an introductory tour.

  • avatar
    mtypex

    Communist China v. Obama Administration

    What’s behind door number three? Is there a door number three? If there was, would I be interested? If two points align as stars in space on a line … I don’t think the trend is my friend.

    POW POW POW! “Trade War Watch”

  • avatar

    sean362880 :

    “Furthermore, the pricing data described above show that underselling by the subject Chinese tires has been significant and continuous throughout the period examined and that the margin of underselling has increased over the period. This underselling by the large and rapidly increasing volume of subject
    Chinese tires eroded the domestic industry’s market share, leading to a substantial reduction since 2004 in domestic capacity, production, shipments, and employment during the period examined.”

    Sean: And herein lies the rub. It’s “underselling” not “dumping.”

    Dumping is selling something at less than production cost. Not happening. Underselling is selling something at less than the competition. American companies sell something at a better price. Isn’t that what America is supposed to be all about? Competition? A better deal?

    If underselling is against the law, then I suggest to round-up the owners of Walmart, Costco, BJ Wholesale, Target et al, throw them in jail and level their stores. Or slap higher punitive taxes on them so that Macy’s, Bloomie’s and Saks can compete.

    While you are at it, round up everybody on eBay and throw them in camps.

  • avatar
    BDB

    The widespread belief that free trade prevents wars is one of the great myths of our time.

    Do y’all happen to know who the United Kingdom’s biggest trading partner was in July, 1914? Imperial Germany, and vice versa.

    I’m for totally free reciprocal trade among western, industrialized nations. We shouldn’t have trade barriers with Japan and Germany anymore than we should have them between Delaware and Illinois. I’d love to see the EU, the British Commonwealth, the USA, Japan, and South Korea have 100% free trade among each other. We all have good labor, environmental, safety, and regulatory standards so it would work and those who make the best products would win.

    I’m not for unrestricted trade with totalitarian regimes with low safety and labor standards like China. The costs of the pollution they produce and the labor they exploit should be “priced in” the products we buy from them. “Cheap” stuff from China isn’t “cheap”, really, the cost is just hidden or passed off into the commons.

  • avatar
    BDB

    Also, Reagan and Bush both out tariffs and quotas in place on Asian products. Unless I’m mistaken in my history, I don’t recall the world ending when that happened.

  • avatar
    taxman100

    I’m about as right wing as they come, but on this, Obama is correct. His only mistake is not putting a tariff on every imported tire for three years.

    Of course, the problem is we long ago gave up our national sovereignty, and our economic future, to “world trade” organizations that make Wall St. a lot of money.

    Wall St. and Washington have been joined at the hip for the last decade, which is why the terrible cap and trade may actually pass.

  • avatar
    BDB

    If underselling is against the law, then I suggest to round-up the owners of Walmart, Costco, BJ Wholesale, Target et al, throw them in jail and level their stores.

    If they paid employees $1 an hour and/or dumped toxic waste into the streets to get “low prices”, they would be thrown in jail!

  • avatar
    gslippy

    @mimizhusband: +1

    This has nothing to do with tires, steel, or trade. The USW can declare victory because Obama did what they wanted, and he will continue to receive their unbridled support in the voting booth. That’s all he’s interested in here.

    If the UAW had asked Obama to lower tariffs so that more of its members could afford tires, he would have done that, too.

  • avatar
    Banger

    BDB:

    And the choir once again says, “Amen.”

    Free and reciprocal is the way to go. Those who can’t play by the same rules (you know, with abstract concepts such as rule of law and fair treatment of workers shouldn’t be allowed to play on the same level as the big boys.

    This is what a lot of us regular joes have been saying all along, but politicians of all stripes (especially righties, it seems) like to squash it under the “but the market will determine what is best.” Which it obviously will, right? I mean, the market also determined it was best for home prices, oil prices and tech stocks to continue on an infinite climb, and they were correct on that.

    Oh wait, what?

  • avatar
    BDB

    This is what a lot of us regular joes have been saying all along, but politicians of all stripes (especially righties, it seems) like to squash it under the “but the market will determine what is best.”

    Trade policy really crosses party lines, though. There are a lot of free trade at all costs Dems (Clinton signed NAFTA*), and some conservatives and Republicans who actually buy the crazy, crazy notion of having some kind of manufacturing industry in this country.

    We can’t have all service jobs. Why? Because someone has to pay for the service! As soon as all our manufacturing is gone, what taxes will be left to pay our tachers and cops with? Who is going to have the money to BUY all the cheap Chinese crap from Mega-Lo-Mart? You can’t run an economy on pushing worthless paper. We tried that for the last decade, look what it got us. Half-finished condos in Florida, toxic mortgage derivatives, credit default swaps, and near double-digit unemployment.

    (*Though I dislike NAFTA (because of Mexico, not Canada) I’d still rather have a democratic if corrupt friendly country like Mexico do cheap manufacturing than an authoritarian, lukewarm at best nation like China. In Mexico, because they have a somewhat democratic political process, they can raise their labor and wage standards through voting. In China, they’ll just call in the PLA when the proles get uppity. See: 1989).

  • avatar
    sean362880

    BS –

    Ok, but even if it isn’t dumping there’s an argument to be made for market stability as well. 300% growth in Chinese imports in 4 years must mean a rapid decline in domestic production, and with it increased unemployment, declining wages, lower consumer confidence, recession, etc. Markets are not inherently stable, see housing circa July 2008.

    The ITC isn’t beholden to the USW any more than the IRS is. Look at the numbers. It looks to me (and the ITC) like the tire market is moving to China too fast for its own good.

    Maybe the Obama administration is just posturing, knowing that the WTO will shoot it down anyway, but there is at least some evidence that they are acting in good faith.

  • avatar
    wsn

    # BDB :
    September 14th, 2009 at 4:32 pm

    If underselling is against the law, then I suggest to round-up the owners of Walmart, Costco, BJ Wholesale, Target et al, throw them in jail and level their stores.

    If they paid employees $1 an hour and/or dumped toxic waste into the streets to get “low prices”, they would be thrown in jail!

    ——————————————-

    The Chinese tire maker didn’t pay Americans under $1/hour and didn’t dump toxic waste into American street either.

    Whatever they pay their Chinese employees and dump to Chinese street have nothing to do with the US.

    The trade barrier will only make those previous $1/hour labor earn $0.5/hours now in even poorer conditions.

  • avatar
    wsn

    Banger :
    September 14th, 2009 at 4:58 pm

    Free and reciprocal is the way to go.

    ——————————————

    Well, the current Chinese regime was established in 1949. If you really want to go “reciprocal”, don’t you think Chinese didn’t treat their worker that bad when compared to the US in the 1800’s?

  • avatar
    wsn

    BDB :
    September 14th, 2009 at 5:13 pm

    In Mexico, because they have a somewhat democratic political process, they can raise their labor and wage standards through voting. In China, they’ll just call in the PLA when the proles get uppity. See: 1989).
    —————————————–

    Sorry, I have to call your theory non-sense.

    No, you don’t increase your salary by voting. UAW did that and now they are on bailout. California did that and now they can only issue IOU.

    Your salary has nothing to do with what you feel (and vote) like. It’s dependent on the economic growth.

    Over the past 30 years, the income of Chinese grew by more than 10 folds. Yet, this was not achieved by voting. When capitalists make money, they naturally hire more to expand and thus they will have to raise the pay.

    Not that democracy is bad. I am all for it. But in this case, it’s not a cure for low wages. India is democratic, yet the average income is even lower than China.

  • avatar
    BDB

    Whatever they pay their Chinese employees and dump to Chinese street have nothing to do with the US.

    Bull. Air and water pollution doesn’t care about national borders. When they pay their employees starvation wages, it means fewer jobs at good wages here in the USA. Why would a corporation keep their manufacturing in the first world where they have to abide by strict labor, environmental, and safety standards when they can make their stockholders happy by relocating to authoritarian cesspools that have no standards and starvation wages?

  • avatar
    BDB

    California did that and now they can only issue IOU.

    California is one of the wealthiest states in the nation with one of the highest standards of living.
    They’re having fiscal troubles not because they are poor–but because Proposition 13 which makes it neigh-on-impossible to raise taxes from that wealth, and the state Constitution which ridiculously requires 2/3 of the state legislature just to pass a budget!

  • avatar
    BDB

    Conversely, the poorest states are places like Arkansas, Mississippi, Utah, and Idaho–states not exactly known for liberal policies or high rates of unionization.

  • avatar

    Yep, it’s an end-around to cement the fact that China & America are now, and maybe forever, conjoined economies. The appeal will turn in China’s favor… as if they didn’t already know that.

  • avatar
    JonnyZX

    Banger said:
    “This is what a lot of us regular joes have been saying all along, but politicians of all stripes (especially righties, it seems) like to squash it under the “but the market will determine what is best.” Which it obviously will, right? I mean, the market also determined it was best for home prices, oil prices and tech stocks to continue on an infinite climb, and they were correct on that.

    Oh wait, what?”

    That’s a complete load of tosh!
    Alan Greenspan artificially holding down interest rates for 15+ years creating a massive debt bubble, along with massive government overspending isn’t exactly what I call “free enterprise”.
    Wow. Just wow. You need to READ, son.

  • avatar
    dilbert

    Slave labor, child labor, toxic pollution, repressive management using quasi security forces to repress and murdering workers, jack squat for pay, etc, etc. It’s all part of the American industrial economic history. It’s the reason the unions were born. They were necessary and legitimate to protect the common man back then, today they are leeches, but I digress.

    We blast China for it now, but it’s really just a matter of they got their start later than we did because of Mao was a crazy dipshit. Not that it couldn’t have started earlier, but the Qing dynasty emperors were up to no good dipshits too. It’s all a part of the industrialization process, and China is nothing special and has to go through it just like we did. It would be a true miracle if they didn’t.

  • avatar
    BDB

    Alan Greenspan artificially holding down interest rates for 15+ years creating a massive debt bubble, along with massive government overspending isn’t exactly what I call “free enterprise”.

    This, folks, is just another version of “The Soviet Union wasn’t TRUE Communism! TRUE Communism would work if we just tried it!” Spare me.

  • avatar
    GS650G

    I’m getting a few spare motorcycle tires ASAP. I’m not putting up with exorbitant prices, limited availability or defective stock as a result of this mad attempt to pay off the unions.

  • avatar
    tekdemon

    Certainly we could level any country in the world to rubble. Except other than the fact that the radiation would backwash over here there’s also the little problem that China can also level the US without ever having a single soldier set foot here either. It was this way with the USSR during the cold war and it’s certainly this way today.
    Not only do they have land based ICBMs with strike capability to reach the United States from China they also have a whole fleet of submarines with a history of eluding US detection (like when they surfaced near our Navy) that also happen to carry a nuclear arsenal.
    Of course neither country would ever dare to use any of their nukes but that’s pretty much the reason why nobody’s used a nuclear weapon in war ever after we did it. Everyone can annihilate everyone else so unless you’re ready to annihilate all of humanity in some suicidal pact no developed nation is going to be nuking anyone else anytime soon. Of course insane terrorists don’t really care about this sort of thing so they might be willing to use one, but most countries have too much to lose to go around starting the last war.

  • avatar
    Autosavant

    “Author: BDB
    Comment:
    Also, Reagan and Bush both out tariffs and quotas in place on Asian products. Unless I’m mistaken in my history, I don’t recall the world ending when that happened.”

    AND if they did, they were, on this subject alone, as Econ Illiterate As Obama. It is NO EXCUSE that the Biggest Superopower on earth did not collapse as a consequence. If you had a clue about Intl Econopmics, you would know that we would have been FAR BETTER OFF without the mindless, defeatist and defensive protectionism, which also gets an F in Econimics.

    I do not remember Bush’s blunders on the topic, but I do remember Reagans. Under pressure from the incompetent and in perpetual trouble domestic (So-called domestic! Every Dictator in thew world can buy millions of their SHARES and own them, if he wants, they are BUBLIC MULTINATIONAL corpS) automakers , he yielded and twisted the arm of th ejapanese to impose the layughable so -called “VOLUNTARY IMPORT QUOTAS”

    These ANYTHING BUT voluntary quotas resulted in the US CONSUMER losing $2 billion a year for many years in the 80s, and back then 2 billion was REAL money. A civic or Accord cost 2-3k more than a POS Cavalier, and without the quota they would sell for the same price!

  • avatar
    Patapon

    BDB :
    September 14th, 2009 at 7:36 pm

    Whatever they pay their Chinese employees and dump to Chinese street have nothing to do with the US.

    Bull. Air and water pollution doesn’t care about national borders. When they pay their employees starvation wages, it means fewer jobs at good wages here in the USA. Why would a corporation keep their manufacturing in the first world where they have to abide by strict labor, environmental, and safety standards when they can make their stockholders happy by relocating to authoritarian cesspools that have no standards and starvation wages?
    ——————————————

    To whom does the air and water in China belong to? If the Chinese govt want to pollute their environment, it will harm their own people first. I highly doubt the Chinese govt would want that PR disaster.

    What you don’t seem to understand is that your so-called “cesspools with no standards” and “starvation wages” are all relative. Do you think your average production worker would travel halfway across the country, enduring a 2-3 day trip, to work for wages that are below any other job available to them?

    The fact of the matter is that your standardless cesspool is a decent, and oftentimes better standard of living than many other rural areas. As for your “starvation wages” argument, it is true that they earn less, but everything there costs less as well. By my estimate, even at $1/hr, 3-hrs worth of work is enough to buy a decent meal for the entire day. Not luxurious by US standards, but by no means a “starvation wage” and better than your typical third-world Asian country.

    But herein lies the irony: Placing tariffs on Chinese goods will only bring the wages down closer to “starvation” level.

    TTAC pointed this out before in Trade Watch #1, but if the US puts restrictions on China, factories will only move operations to 3rd world countries with even lower wages. Short of blockading an entire hemisphere, these low-skill jobs are never coming back to the US.

  • avatar
    dilbert

    “If they paid employees $1 an hour and/or dumped toxic waste into the streets to get “low prices”, they would be thrown in jail!”

    And if they paid employees $70 an hour and/or followed US environmental standards, they’d be bankrupt. They choose option A, but you can choose not to buy them.

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