Skip to comments.Romney's Threat to China
Posted on 10/27/2011 6:21:37 AM PDT by Kaslin
In his 2010 book "No Apology," Mitt Romney has a lot to say about China, much of it unfavorable. He writes of Beijing's "brutal repression and incarceration of dissidents." He decries the brazenness of Chinese enterprise, with its "rampant theft of intellectual property from Western businesses." He warns that China's "aggressive pursuit" of cyber-warfare capabilities has made it "the most active cyber-combatant in the world." He details the ominous Chinese military buildup in combat aircraft, submarines, and ballistic missiles. He laments the communist government's willingness to shield the odious regimes in Iran and Sudan from international sanction.
Nevertheless, Romney's criticism of China has its limits. Nowhere in his book does he characterize China as a hostile trade foe, or condemn its currency policies as "cheating," or call for the imposition of protectionist tariffs.
Yet on the presidential campaign trail these days, the former Massachusetts governor routinely slams the Chinese government, vowing that on "Day One" as president he'll designate China a "currency manipulator" and impose tariffs on Chinese exports to the United States. "We've allowed China to just walk all over us," Romney fumed during an interview with Sean Hannity the other day. He dismisses concerns about starting a trade war with America's largest foreign creditor. The only "alternative to confronting China," he wrote this month, "is allowing the Chinese to take by trade surrender what we fear to lose in a trade war."
Whipping up resentment against foreign trading partners is a time-honored way for candidates of both parties to score cheap political points. Romney's China-bashing today is reminiscent of the Japan-bashing that candidates like Pat Buchanan and Dick Gephardt sought to ride to the White House a generation ago. What makes this candidate's protectionist rabble-rousing so disappointing is that he knows perfectly well how superficial and spurious it is.
The vehement line of attack Romney keeps up against China today is absent from the manifesto he published last year. In No Apology, Romney emphasized protectionism's self-destructiveness. "US companies faced with... less costly products from overseas have to make one of two choices," he wrote. One is to improve their own technology and productivity; the other is to "argue for protection, hold on as long as possible, and slowly watch their market share wane." Far from endorsing vigorous presidential action against foreign competitors, he faulted George W. Bush and Barack Obama for yielding to protectionist special pleading. The Obama administration's punitive tariffs on Chinese tires may have been "good politics," Romney declared, "but it is decidedly bad for the nation and our workers. Protectionism stifles productivity."
It may be true, as Romney and others claim, that China artificially undervalues its currency, thereby making Chinese goods less expensive to import than they otherwise would be. It's easy to understand why some manufacturers might not happy about that, but for US consumers generally China's policy is a blessing. "By keeping the value of its currency low, Beijing enables Americans to stretch our dollars farther," economist Donald Boudreaux remarks. "This results in significant improvements in living standards" -- especially for poor and working-class Americans. Does Romney really think that's a bad thing?
And does he really believe it's in the US interest to hold the threat of new tariffs over the heads of Chinese manufacturers? Romney's "Day One" threat to slap higher duties on Chinese imports is just another way of saying that if China doesn't force Americans to pay more for made-in-China products, Washington will. Tariffs are taxes, and they will do more than hurt millions of American shoppers for no good reason. They will also penalize innumerable businesses that rely on imported goods and materials, and the myriad of employees, managers, and shareholders whose economic welfare is linked to those businesses' success.
As it happens, the value of China's currency has appreciated by around 30 percent in recent years and is likely to keep climbing. But from an American perspective, it shouldn't matter whether imports from China cost less because Beijing manipulates the yuan, because Chinese manufacturers have access to abundant raw materials, or because of a new technology that turbocharges Chinese productivity. Whatever the reason, the bottom line is the same: lower prices for US consumers. And lower prices aren't something from which Americans need to be rescued by politicians.
"When I see an American company challenged by a foreign competitor," Romney wrote in his book, "I don't look for protectionist policies as an answer to the company's problems." If only that Romney were the one running for president.
...thus socking the American consumer in the gut. America has no significant manufacturing capacity to compete efficiently with these imported goods (of course, if we did, there would be no need for the tariffs), so the only real effect of such a tariff is to force higher prices on us.
Who do I hate more, Mitt Romney or the commie chinese? Probably the Chinese.
Hate to say nice things about Romney, but he’s right on this.
So is Donald Trump.
As was, H. Ross Perot, before both of them.
And incidentally, rock-rib conservative Duncan Hunter.
we are still in a position economically to do so because they need us at least as badly, if not more so, than we need them.
So, given their manipulations of currency, given their cyber warfare against us, given their stealing our technology and intellectual assets, we must react.
The best way to react is to ensure that American companies are given a reason to do business here with something more than punitive actions against China (though there should be some that directly relate to what they are doing). If we lower taxes on corporations (we are currently taxing coprporations at the highest rate in the world) and reduce the many burdensome and in many cases rediculous regulations on them, then more of them will stay right here and be able to produce products cheaper and in America.
We also need to ensure that we have the energy to operate without being beholden on other nations. We have the energy here in America and off our shores and we need to go after it with a will.
We need to bolster and push our pown military R&D and then develop and field the platforms it produces. We need more fighters that are 2-3 generations ahead of the Chinese. More combat vessels...because they are rapidly closing that gap...and more fielding of the laser, energy, and other exotic technologies that we now have right at our fingertips.
Finally, we do need to respond to the agressive and improper practices the Chinese have leveled against us. but it must occur in the context of this broader appraoch to restoring America. Specifically responding to areas where they are stealing our intellectual property. Specifically responding to those sectors where they are using their command economy to artifically support industry in ways not consistent with the real free market by leveling the playing field. And we need to do it in a way that allows American business and manufacturing to benefit.
Anyhow, Romney is "talking" about this and it needs to be talked about and acted upon.
Just my two cents.
He is slime.
Has Romney held a contrary position on Chinese trade abuse?
I wouldn’t worry too much, Romney will look at the market effects of tariffs and probably find a way to gracefully back away from his threats. I don’t say this as a compliment to Romney; so many politicians (not just Romney) say a lot of things to sound tough but don’t really mean to go through with them. Romney (like Clinton) just seems to have more skill at doing this than most. As a contrast to this, we had W, and that’s one thing I really liked about him.
I would prefer if Cain were to address the issue head-on.
Romney’s right on this.
Bush was way, way wrong. In the “free trade” tank 100%.
A two-headed monster crushed American industry. The two heads are named Government Regulation and Labor Costs (a.k.a. Unions).
You spoke well about how to cut off the one head, but if the other head survives, the beast survives as well, giving American industry little hope for a comeback.
Hard to compete, at pricing levels, against .25 cents/hour wages and prison labor.
Free trade is a myth. All nations, except for our own, effectively promote their domestic industries against foreign domination. For some reason, some conservatives have forgotten this.
If you want to lose what manufacturing we have left, continue to advocate so-called free-trade with nations that pay their people next to nothing in wages.
We became a manufacturing super power through the use of tariffs to promote American industry. We could use them again to restore our manufacturing capability.
I think that bi-lateral trading relationships with friendly nations is the only way to go. They have something we want and we have something they want. That sort of trade is mutually beneficial. Trade with nations that hate us or surrendering our sovereignty to global bodies such as the World Trade Organization is foolish and unconstitutional.
I do not worship at the alter of “Free Trade” like many self-professed conservatives do. I am in favor of “America First” just like our founding fathers. Free trade between the states of our Republic. Liberalized or more relaxed regulation of trade with our friends and allies. Managed trade and tariffs with all others. This is what made us strong in the past. This is what we need now.
The people we elect in 2012 are going to have to address both. I believe we will bring in people (barring some extraordinary circumstances imposed upon us) who will do so.
The people are fed up, and I see this election, even more so than in 1980, as the best chance to make real substanative turn arounds in my life time.
Say, for example, that China Mfg Co. makes Product A, which is very popular in the US. Nobody in the US makes anything like Product A. The US decides to slap a tariff on all Chinese imports, including Product A.
American consumers are now faced with a choice: suck up the tariff-induced price increase because there is no alternative source of the product, or go without the product for some unknown amount of time until someone is brave enough to set up a factory to manufacture something like Product A (facing punishing regulations and labor costs along the way) -- who knows how long it will take to ramp up manufacturing to the point that will satisfy demand for Product A (at a much higher cost than it was pre-tariff)? And that's just one product.
So here's my point: Tariffs are designed to protect EXISTING industries, not promote the development of them (which is what you argued). The US has no meaningful manufacturing capacity to protect! The horse has already left the barn!
If we impose tariffs in this circumstance, whether or not some manufacturing returns as a result (and it won't be much), consumers will lose.
But what the heck, let's give it during a time of global economic instability. What could go wrong?
I agree that the consumer will pay a higher price if item A is scarce or not immediately available in the U.S. But, I would pay that higher price if that means a strong, vibrant US manufacturing base was the result. In fact, I make every effort now to buy American-made products if at all possible. If I can’t find a comparable American-made product then I will look for a supplier from a country I regard as friendly to the U.S. Failing all that, I will buy the Chinese-made product if that’s my only choice.
If you want to see an industry where trade protection works, you have no further to look than the US arms industry. Since there is an outright ban on importing firearms with certain features (think AR-15), foreign manufacturers have moved production here (I.E. SIG, Para Ordnance, etc). Additionally, many US parts suppliers have formed to provide conversion parts for other firearms that are allowed to be imported (I.E. sporterized AK rifles). Those are just two examples where trade restrictions have resulted in the growth of US manufacturing. So, I concede your point that promoting our industries with managed trade and import tariffs increases costs to the consumer, but in my opinion the benefits outweigh these costs.
However, I don’t believe your point about tariffs protecting only existing industries is accurate. When Hamilton and the other Federalists first began our 100 year plus policy of strong tariffs, there was little manufacturing capacity in this country. The dominant manufacturer in the world was England, which, apropos to my argument, supplied most of our finished goods at that time.
With these tariffs in place, America began to develop a manufacturing base. Around the same time, advocates of Free Trade in England began to export much of their industry to us. They argued that the Americans could produce a lot their existing products more efficiently for a number of reasons (vast resources, plentiful and motivated workforce, etc). They also looked to improve their profit margins. While they were correct in the short term, what they failed to realize was that America was stealing its market right from under their noses. This may have happened naturally due to those advantages I previously alluded to; however, the British policy of “Free Trade” undoubtedly accelerated the process. Basically, we did to the British what the Chinese are now doing to us.
Our country has always been forward-looking in outlook. For the most part, this is good mentality to have. However, trade policy is one case where a solid understanding of history is essential. We have forgotten what made us a world power and we have adopted the policies that helped weaken the British Empire. We have failed to learned from our history and unless we “wise-up” will surely continue to be on the losing end.