Chinese Tarriff: what, why, how?

 

This week the US Congress took some small steps to create Tariffs with goods from China. Why? Well China is the Worlds largest producer of imported goods. Basically, if China did not export goods, your local Wal-Mart, K-Mart, Meijers and Piggly-wiggly would be absolutely empty. Other than food, cars, and electronics, they produce all the other crap you buy. China is able to do this because, according to many World economists they devalue the worth of their currency, indicating the Yuan (chinese dollar if you will) is approximately 1/8th of the value of the US dollar.  But WAIT! Why is that bad? Well from 1942-1980 having a “weaker dollar”  than the US would have been a bad thing, however the Chinese used this to their advantage. If the US is too far on the Capitalist model, the Chinese are still too far under the Communist model.  In many ways, the Chinese workers have an advantage in urban areas, “free” healthcare, corporate/government housing, however due to the devalued Yuan, they are able to pay the workers about 1/10th what US businesses would be able to pay our workers. So, what we end up with, is Chinese produced goods, MUCH cheaper than US produced goods.  Unfortunately the US consumer is happy to whip out our credit cards to pay for those goods. This leads us to the other side of the coin-the US Bank and auto bail-outs, in conjunction with two incredibly costly wars, and the poor Social Security and Medicare models, the US Government now borrows back that money you and I spend on Chinese goods at a high interest rate. So, in summary, the US worker looses their job due to less costly imported goods, then turns around to buy those same goods which took away their job, at a very high interest rate. Seems like a heck of a good plan….for the Chinese Government. In my humble opinion, these type of sanctions are WAY over due.  A total ban on Chinese goods would do a few things, both bad and good for US workers and the middle class: 1. The cost of items in our “super-stores” would sky rocket (bad). 2. More of those same goods would be produced by Americans (good-more jobs). 3. Most importantly, this would put the Chinese in a position where they would not have money to loan the US Government-IE: Politicians would need to stop writing checks, which we can’t afford, which is very good for the US middle class and economies over-all.

Please post comments below, I am always happy to hear your opinion.

Thanks,

Logan

Tags: Business, Democracy, Democrat, Politics, Republican

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