It makes no sense for the U.S. to attempt to reshore simple low-value-added manufacturing.
This isn't America's best future.
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| Thanh Cong Textile |
It isn't Vietnam's best future, either.
Those factories left China. Before long they will leave Vietnam, too, and this work will be done in Indonesia or someplace even poorer and less developed.
This isn't where the U.S. should want to compete.
A short, funny TikTok video imagines reshoring manufacture of textiles and i-Phones.
Trump found political traction by addressing the problem that globalization puts American workers in competition with workers in less-developed, low-wage countries. Democrats thought that problem would work itself out because American workers would get education and retraining and do high-level complex jobs in industries with tradable goods. Some did. But the displaced American worker problem in fact worked itself out in the manner of a republic with an electoral college. Displaced workers in the U.S. manufacturing regions voted for a politician who said he would bend the rules of economics to protect them. In 2012 that was Barack Obama, who bailed out the auto industry. In 2016 and voters chose the charismatic candidate with the better jobs message.
This week President Trump is saying that the pain of declining stock prices is worth it because tariffs will force companies to build factories here. President Trump perceives a negative balance of trade with a country as a "loss" to the U.S. and he presumes they are cheating us. In fact, they are buying something we create and need to sell to them: our debt. We cannot compete head-to-head with low-wage countries manufacturing simple goods any more than we could compete in producing tropical fruits. The only way we could be competitive constructing T-shirts is if they were all made by robots, which doesn't solve the worker problem. Moreover, we shouldn't divert resources to build robots that can make T-shirts. Our people and robots should be making airplanes, satellites, medical devices and other complex products where we have the comparative advantage.
It is in the interest of the U.S. to protect jobs that can be done successfully by non-college people who in earlier generations would have worked in manufacturing. They are the people most harmed by globalization. Tariffs to bring back manufacturing are mis-aimed. It is a false hope and a waste of resources. Our current opportunity for middle-income jobs for a blue-collar workforce is to expand the work in skilled and semi-skilled trades. Those jobs would be done here.
Since Trump is willing to use the blunt force of government to deal with immigration, it is better to direct it where it would address the displaced worker problem. We would use law enforcement to demand that jobs in construction, agriculture, transportation, and maintenance be done by American workers, and that those jobs be better paid, as a matter of law. It would be painful. Immigrants would be pushed out of jobs and consumers would find that construction and food is more expensive. It would be a different locus of pain for the intended result of jobs for Americans. But if government is willing to use a heavy hand and impose a 25 and 50 percent tariff to reshape American industry -- and it is -- a more promising model is to use that heavy hand to impose and enforce something like a $25 and $50 per hour wage for work currently done largely by undocumented immigrants.
Will native born Americans be willing to do hard, physical work? If it were paid at family-wage levels, possibly so. It is more likely than finding American workers to out-compete the women sewing bras in the video above.
However we address the problem of the displaced American worker, we need to recognize that someone gets hurt. It would be fairer to American citizens -- and since this is a democracy, they are the ones with a vote -- to displace immigrants here without documentation than to continue to displace American workers by offshoring low-skill factory jobs.
5 comments:
Peter is correct in asserting that low-skilled jobs should be outsourced to low-waged countries, while high-skilled and semi-skilled work that pays higher wages should be done in America. I don't want to pay $30 for a Hanes T-shirt that is made in America, when it's currently being made in Honduras and sold for $7. But there is more to these tariffs. Most every foreign country charges huge tariffs on American-made goods, while America charges those other countries low-tariffs in-return. America is getting screwed when foreign countries impose huge tariffs on American-made goods. It hinders our trade. Trump is rectifying that by charging other countries tariffs that are similar to what they charge us. Now that that has happened, then other countries (particularly from Asia) want to renegotiate to zero tariffs on both sides. That creates freer trade. People can criticize Trump's tariffs, but he's getting other countries to drop their tariffs to zero, and that is an accomplishment.
It doesn't sound like our biggest trading partners such as China or the EU are interested in negotiating. They're just going to work with others less clueless.
Other countries do not impose huge tariffs on the US. Before Trump's reckless tariff "policy", most countries charged an average of 2 or 3 percent. Due to trade agreements, some countries had no tariffs. China charged 15%. We were not "getting screwed by everyone". Targeted tariffs on specific countries or items make sense. Plunging the world into a recession in order to see oneself on the news every day is the act of a madman.
Anonymous: “Most every foreign country charges huge tariffs on American-made goods, while America charges those other countries low-tariffs in-return. America is getting screwed when foreign countries impose huge tariffs on American-made goods” Is that true? Can you provide examples? And if true, are all trade imbalances truly “unfair” or is it at the macro-level, the kind of give and take that gives both sides what they need? “Getting screwed” is really just perception isn't it? It makes defending such a claim easy.
HANOI (Reuters) – Vietnam will cut its tariffs on several U.S. products including LNG and cars, the head of the Finance Ministry’s tax policy department said, as the country tries to avoid being hit with U.S. tariffs because of its large bilateral trade surplus. Among the cuts, the tariff on American LNG will be cut to 2% from 5%, on automobiles to 32% from a range of 45% to 64%, and on ethanol to 5% from 10%, Nguyen Quoc Hung said in a statement posted on the ministry’s website late on Tuesday.
The tariff cuts are aimed at “improving trade balances with (Vietnam)’s trade partners,” Hung said, adding that the U.S. and Vietnam now had a Comprehensive Strategic Partnership.
Hung said Vietnam will also remove its tariff on American ethane. He said the decree on the tariff cuts will be ready within this month and will take effect right after that.
The cuts are part of a series of measures the Southeast Asian industrial hub has flagged in past weeks to reduce its trade surplus with Washington, which exceeded $123 billion last year.
https://1027wbow.com/2025/03/25/vietnam-says-to-cut-tariffs-on-several-u-s-products/
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