Trade War negatively effects consumers


Photo by Alex Steil

Consumer Eugine Romano holds up almonds to show price increase. According to the Federal Reserve Bank of St. Louis, the price of almonds has risen by $1.30 since June 2018.

You are losing money. I’m losing money. Your parents are losing money. People are losing jobs. We have yet to see the full impact of what this will mean for us. President Donald J. Trump engulfed the United States into a full-on trade dispute with China in June 2018, and it hurt the average consumer, the average company, and the average manufacturer. In short — it is pointless. There is no benefit to the dispute and all of the drawbacks have yet to come forth and be seen.

Trump initially engaged in the trade dispute because he wanted to bring manufacturing and farming back to America to the levels they were in the hay-day of the thirties. He also wanted to get back at China for their practices of intellectual property theft, an action that has been condemned by both sides of the political aisle. Since 2008, United States steel exports dropped 8 percent, while in the same time frame, China’s steel imports have risen by 344 percent. There is no fantastical ending where both the United States and China can come out squeaky clean — one of the nations has to surrender and wave a white flag.

The United States’ industrial production has dropped almost 60 percent since the mid-1930s. Several presidents have tried to save the industry, along with mining jobs in recent years, but there has not been any significant rise in either Republican or Democratic administrations. The only reason that it will not come back is that it would cost too much for the companies that manufacture.

I’m required as a factory, as a plant manager, pull say, a 10 percent profit margin. I can’t pull that 10 percent profit margin off everything. So that costs more, unless I cut costs somewhere.”

— Phil Schut

When asked about the reality of manufacturing jobs coming back to the United States, Project Lead the Way teacher, Todd Kapsner, said: “I shouldn’t say not a chance, I mean, very, very unlikely. Because of that wage.”

The reason the manufacturing industry has been so hard to revitalize in the industry is because of cheaper wages in countries that accept outsourcing to grow their economies. There is no way for the United States to limit outsourcing for these kinds of jobs, and our country has come to accept that fact, no matter how hard that fact truly is.

The United States Trade Representative reported that in total, Chinese Intellectual Property Theft and cybercrime has cost about 200,000 jobs were lost in the United States.

“While people are affected by it, it seems like most people, while maybe don’t necessarily agree wholeheartedly with what’s going on, at least understand that we need to something and we haven’t done anything in twenty, thirty years,” Kapsner said relating to Chinese Intellectual Property Theft.

Both parties agree that Chinese Intellectual Property Theft is not something that should be happening, but there are remedies in the World Trade Organization that could lead to a more useful, sensible conclusion of the dispute between the two countries. In an ideal American-victory situation with the WTO, China would have been severely punished by tariffs and had to pay fines to the United States, and this would have only happened after a fair and just judicial process.

Ultimately, average household goods, from farmed food to televisions are going to, if not already, boom in price. This is simple economics.

“Our profit margin got slimmer again, which means now we need to figure out and lif you’re running a factory, and everything just got more expensive to bring, and I’m required as a factory, as a plant manager, pull say, a 10 percent profit margin. I can’t pull that 10 percent profit margin off everything. So that costs more, unless I cut costs somewhere,” business teacher Phil Schut said about being put into a hypothetical situation of maintaining a profit.

It is simple economics: when a good jumps in price, the only way to maintain a company’s executive structure is to raise the price of the good. Trump does not, however, seem to realize this. The expected retaliation from China did not phase him, and it makes it all the more dangerous that he is the one at the negotiating table, failing to make it work. Trump seems to think that his trade war is working, but no evidence proves that, and you and I are picking up the slack to make sure he gets a win — if it ever comes.

Trump does not seem to understand that the two economies at play are not the same. In China, the biggest companies are either run by the government or heavily subsidized by the government. In the United States, we have old fashioned capitalism, you either make it or you fail, no in between.

“Their manufacturing is all driven by, I shouldn’t say all, but it’s helped by their government where the other manufacturers are on their own,” Kapsner said.

“The way that a business plan goes is like the number one vital thing you must have, is a budget because the budget control pretty much what you’re in charge of, and how much you can afford and how much demand your business has,” senior James Calderone said of a basic business plan for a company.

The fact that Chinese companies are supported means that if Trump wanted to wipe of Chinese steel so it returns to America, he would first have to wipe out the Chinese economy. Even if that extremely unlikely scenario were to happen, steel would still go wherever it is cheapest, and the United States is not the next on the list. Trump does not seem to understand that no matter what he does, American manufacturing will not be like it was. Due to both the high labor costs in the United States and the fact the demand for blue-collar jobs is down, that obscene reality is not feasible, and the average American is losing money because of Trump’s inability to reckon with those facts.

Kapsner commented on the demand of blue-collar jobs in the United States: “The problem is that we’re in a global economy, and you cannot complete with wages in other countries. And that’s why that [labor is] going away.”

Trump does not seem to reckon with the fact that the majority of people are not going to work in the manufacturing industry, and the majority of companies are not going to use American labor because it is much more expensive than that of, for example, China.

The president of the United States has always struggled with facts, but it never actually hurt the American people the way this has, the statements only inflamed tensions.

One of Trump’s main campaign messages was that he was going to revitalize the steel industry, but he cannot seem to do it. Nor could Barack H. Obama, George W. Bush, or Bill J. Clinton. It is not for lack of trying, it is for surging globalization. Those three presidents before Trump knew that their efforts were fruitless, but Trump cannot seem to fathom that. He cannot afford to; largely his political base is the manufacturing industry that died in America, those will cost him. Trump campaigned on not being an ordinary politician, and he also said he could bring manufacturing back as a dealmaker-in-chief. Right now, he’s failing at both.