Thanks to complaints from U.S. ribbon companies, the United States has now imposed anti-dumping duties of up to 231.4 percent on gift-wrap ribbons imported from China. Duties of up to 4.54 percent were imposed on Taiwan. The difference was explained by the Commerce Department as due to China having a higher dumping margin of between 208.8 and 231.4 percent compared with Taiwan’s margin of 116.6 to 137.2 percent. Yet, some Chinese and Taiwanese firms were exempted from the duties.
And thanks to Washington’s decision to sell arms to Taiwan, China has imposed duties of up to 105.4 percent on U.S. chicken products.
Where do these ridiculous numbers come from? From central-planning government economists, that’s where. I liked the last line in an article about this in The China Post: “The Commerce Department will issue its final calculation of anti-dumping duties on both countries in June.” This is insane, and for two reasons. Didn’t Mises write about the calculation problem in the 1920s? Who is the brilliant economist at the Commerce Department that arrived at the figure of 231.4 instead of 231.5 percent? And secondly, a company in China wants to sell us in the U.S. cheap products and the U.S. government forbids it. The same government that talks about the benefits of NAFTA and free trade. Insane.
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So when the U.S. exports goods at low prices, that’s called free trade, but when China does, it’s called dumping. Hmm . . .
Senseless. I am sure they have some stupid system which fabricates arbitrary numbers.
“Senseless. I am sure they have some stupid system which fabricates arbitrary numbers.”
I heard it’s a monkey with a lottery wheel.
It’s important to remember that Free Trade Agreements only really reduce tariffs. Every other barrier under the sun like currency manipulation is not addressed. Nowadays it’s hard to tell the reason why a good is cheaper. Is the good cheaper due to a foreign competitor having a better product with better technology to make the product cheaper, is it maybe a poorer quality product, or does the foreign trade competitor create new money faster to depreciate their currency faster so that production is cheaper relative to other trading partners? Nowadays outsourcing is actually a bubble. Outsourcing depends on continued world inflation where the country that creates new money faster becomes the cheaper relative location to produce. China’s currency without a doubt is tremendously undervalued with almost 3 Trillion of reserves and its not undervalued because of the free market but to government management of the currency where for every dollar it receives in exports it prints new Yuan to exchange for those dollars with its exporters where it then purchases US Treasuries with those dollars. Currency manipulation is protectionism and it leads other countries to embrace protectionism too. The ideas of comparative advantage were at a time when money was sound and backed by gold. It wasn’t mean’t to be applied to a fiat monetary system.
How many icebergs does the good ship Mercantilism need to hit before she sinks for good?
“I heard it’s a monkey with a lottery wheel.”
Those are called politicians.
You forget also that China has an industrial policy which is the fancy name for backing the manufacturing sector with an unlimited amount of credit created out of thin air by the electronic printing press. Having an industrial policy allows countries to dump products below cost. So if for example a product costs 5 dollars to make, they can sell it in the US below cost at 3 dollars where the foreign central bank will create new money out of thin air to cover the difference between the cost to make and price sold below cost abroad. These prices below cost are only mean’t to be temporary. Once foreign competitors are put out of business, their capital will then be absorbed and then prices will be raised to the level that a profitable company would have it at. So trade in a lot of instances today is really just a money printing out of thin air game. It seems nobody talks much about industrial policy and backing private companies with an unlimited amout of credit that is created out of thin air and how that distorts trade and competition.
“China has an industrial policy which is the fancy name for backing the manufacturing sector with an unlimited amount of credit created out of thin air by the electronic printing press.”
Sounds exactly like America’s policy too. Have you never heard of the federal reserve, of quantitive easing?
By the way regardless of the credit rate a company cannot sell a product below cost without making a loss, if it makes a loss than the subsidy is guaranteed to be temporary, if it is sustained then why complain about the Chinese willing to subsidise your consumption? Hundreds of years ago they called it mercantilism when protectionists like yourself argued for laws which benefit local producers at the expense of the wider population.
So here’s my question. We have established here, I believe, that protectionism is not a good thing, so how can U.S. businesses and industries begin to improve their standing in at least a somewhat free trade system? I contend that I would have no problem spending a little more for an American-made product, but I won’t currently because I don’t have a lot of confidence in the quality of what we produce for the most part, and people pushing to buy American just because it’s American don’t help my uneasiness. What is the next step for American factories? Do they need to cut the work force so they can charge less for their products? Do they need to somehow cut wages across the board to do the same? I only see this leading to a lot of problems because I don’t know if workers would be looking at the big picture. Or do we need to somehow raise our level of expectation for what we produce again so that we can start marketing our quality of product instead of just where they were made? And how would we go about doing this? Obviously I’m taking a class where this issue has come up, and I’m interested to find out the opinions of others.
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