By PERRY O. HOOPER
I am a strong advocate for free enterprise and for free trade. However. we have a real problem with China and their trade policies and tactics. Imports of Chinese goods alone equal two-thirds of the global U.S. trade deficit today.
The very first trade issue President Trump raised when he began his presidential bid is the trade “shock” that China delivered and continues to deliver to the U.S. Roughly 40 percent of the decline in U.S. manufacturing between 2000 and 2007 was due to a surge in Chinese government subsidized imports primarily after we paved the way for China to join the World Trade Organization in 2001. This led to the sudden loss of about 1 million factory jobs in Ohio, Michigan, Wisconsin and Pennsylvania. This “China shock,” led to unemployment, financial stress with individuals dropping out of the labor market requiring government assistance.
Closer to home since 1961, the Wellborn family has owned and operated Wellborn Cabinet, Inc., headquartered in Ashland, Alabama. Through hard work and determination, they have built it into a multi-million-dollar company with 2,500 employees located across the U.S with 1.500 employees located here in Alabama.
Chinese cabinet producers have established significant import facilities in the United States to penetrate the U.S. market. These producers benefit from a host of subsidies including preferential lending from Chinese government banks, tax and import duty exemptions, subsidized land, energy, and chemicals, government grants, and other forms of assistance. As a result, U.S. kitchen cabinet producers report sales lost to Chinese products sales worth tens of millions of dollars a year. These government subsidized Chinese cabinets threaten the mere existence of Wellborn Cabinets and hundreds of family owned and operated cabinet manufacturers such as Bishop Cabinets right here in Montgomery.
The second problem has to do with access to China for U.S. goods. There, noted David Autor the MIT economist who’s done some of the most compelling research on the impacts of China trade., “China has not only taken our lunch, they’ve opened a restaurant that’s serving it to their citizens.”
We assumed that China would open its borders to free trade after it joined the WTO, Instead, China “reformed and protected.” Take the automotive industry for example, China kept a 25 percent tariff on new cars imported from the U.S. (our tariff is 2.5 percent) and similarly steep tariffs on imported auto parts. These tariffs froze the U.S. out of China. Meanwhile China grew its companies behind a wall of protection, fed them with state funds and, when they were competitive enough, unleashed them on the world. Only then China opened to U.S. and other competitors by lowering some tariffs, but by then its own companies had a vice grip on the market. And now, Chinese carmakers are about to start sending huge numbers of fully built cars to the U.S. as it has done to the rest of the world.
“China’s rapid rise, while may have been positive for world welfare, has created identifiable losers in trade-impacted industries and the labor markets in which they are located.” Noted David Autor. Past administrations were more concerned about world welfare than American jobs; not President Trump.
All this doesn’t mean that China and America cannot both thrive at the same time if trade deals are properly constructed and executed. China is now a first world power, not a third world country and must treated as such. President Trump has pointed this out since the beginning of his candidacy. All Americans must support the President in his efforts to bring about fair and balanced trade, or we will surrender our jobs and our future to the Chinese.