Free Trade- just what can we live without?

[Corporate666]

43. I don't think it's that simple

I own an electronics manufacturing company. I make stuff in the USA.

A lot (most) of the raw metal on the market is made in China. Most of the electronics components (resistors, capacitors, chips, LED's, etc) are made in China/Taiwan/Malaysia. The raw circuit boards are mostly made overseas.

Most people don't appreciate the cost difference. It's not 20% more in the USA. Most US manufacturers I know couldn't make stuff for even double or triple what the Chinese make it for.

And even if we came up with insular trade policies... it would be more economical for companies to make stuff overseas because the other 80% of the world economy that isn't the USA would still want to buy those low cost parts.

What would happen is that US Exports would be virtually zero - because who is going to buy a $1,500 USA made iPhone when the exact same iPhone can be bought for $600? Nobody would. And even though some claim that higher wages in the USA would offset the higher cost, there have been many studies on this that prove that it wouldn't happen. We would go back to the 1940's where you owned one TV for your house, one phone (no mobile phone), you took trips in the car vs. flying. You eat at restaurants maybe a few times a year. You buy beef for Sunday dinner.

So if we implemented huge tariffs on imports to make the prices high to compare with American-made products, all we would do would be to shut ourselves off from the outside world. We would be economically like North Korea. And other countries would implement tariffs on our stuff so our exports would basically be zero. We would lose the benefits of mass manufacturing (after all, the whole USA population is only 4% of the world) so companies would rather make stuff for 96% of the free market by locating in China/India and just importing stuff to the USA.

It would really drive our economy to ruins. I am not embellishing when I draw the parallel to N. Korea (or Cuba or Venezuela). Closed economies don't work - we'd have massive unemployment, inflation. It would be the great depression, but much much worse.