Uncle Sam was coasting through the aisles of his nearest Walmart, pushing his cart as he leaned into the front handlebar after a long day’s work; his smug smile cannot help but hide his 2% pay hike for the third month in the row. He exhales a breath of relief, relief that after all these the U.S of A has finally come to a solution to the problem caused by the Chinese: the trade deficit. Moving along the lines, Uncle Sam suddenly has an urge to splurge his salary for the month on something fancy, maybe a new smart-TV (it has gotta be American made).
What he sees in the TV aisle upsets him– his pay raises aren’t doing him a lot of good after all. He is shocked to see none of the T.V’s are American made, but instead they have the same, plain-old label he’s seen for the last two decades– made in China. Unfortunately, the Samsung Smart T.V is now $3000, up from $1800 six months ago. Wait a minute! What’s happening to the economy. I thought we were teaching the Chinese a lesson after all!
Then a phone rings. “Hell-er Dave, How y’all doin?” Uncle Sam murmurs.
“Yeah, buddy, about that. I was going to ask you that. We are in the process of laying off workers for the next few quarters,” the voice solemnly replies on the other end.
It goes without saying that plenty of Americans were enjoying a slice of the roaring economy for the past few months, unaware of the pandemonium in Washington and Beijing. One thing must be made clear to all Americans: at least in the current global economic atmosphere, there is no alternative to China. No other nation, not even the mighty US, has the manufacturing firepower that China boasts; the soul and heart of the Chinese economy are built upon a large-scale manufacturing industry supplying goods to the rest of the world for an outstandingly cheap price. Even if US manufacturing companies brought their overseas cash reserves back to the US, it would be years, if not decades, before these companies could build manufacturing plants capable of producing the number of products they are currently selling. On top of construction and equipment costs, companies will be spending much more on production costs. The end result is apparent– a foolish attempt that will end up in billions of dollars being wasted.
Mr.President thinks he can teach Jinping a lesson by hammering his nation with a hefty USD$250 Bn tariff; Mr. President feels gloated because he thinks he is making ‘America great again’. Unfortunately, the tariffs enacted by the US government in an effort to reduce the US consumer’s consumption of Chinese made products has been a miserable failure– all it has managed to do is stab America in the back. The past month, September 2018, saw the US import the greatest amount(in terms of USD) of Chinese goods, more than USD $50 Bn; in the midst of this, US exports to China have fallen. Apparently, it looks like China’s puny USD 60 Bn tariff is getting more bang for its buck than the Donald’s USD 250 Bn mammoth. Guess the tariffs aren’t doing their work after all.
The current administration is denying the truth: in a globalized economy, the US should focus on the liberalization of trade as well as the development of it’s growing industries instead of adopting protectionist policies. Trade protectionism has again and again proven to be the bain of economic prosperity– it has fathered economic recession and downfall. While it must be admitted, that the local US economy is growing at an unprecedented pace, employing more and more people and reducing employment to levels unseen in the last two decades, these are merely sugar-coated facts that are hiding the dark truth behind them. With a roaring domestic economy, spending is going out of control and the Federal Reserve is already tightening monetary policy to stop spending and debt from reaching sky high levels. The current economy is overheating and analyst predictions are too flowery for the future.
Once the economy fails to meet the expectations of analysts, the reaction throughout the economy is going to be downright fear– then, into the depths of fiscal ruin. Trade wars should be avoided, much less proposed, and the true aim should be to support industries that are blossoming. 2018 will be a year to remember if the current pandemonium continues. May King Midas be watching from the depths of hell with a sympathetic eye.