Timothy Benton | May 17, 2019 | 0
Looming Trade War, A Need For A Food Consortium
We have for years not only dealt with a massive redistribution of American capital to China and other nations; this practice has gone on so long these nations have gotten to the point that they think it is their right. It is time to stop this, will it have painful effects while it is going on? Of course it will, but like all things you have to have some pain before you see any gain.
China is upset due to tariffs that Trump has announced, but never speak of their own, seems they reserve this right for them and no one else. And China is not alone in this; we see this from Mexico and Europe as well. We hear of global trade, but the reality is this has nothing to do with this, this is more about fleecing America of its hold it used to have on manufacturing, sending it elsewhere. Trump has seen this and is determined to put a stop to it, the resistance to this will only grow until the other side sees they will come out as losers if they push back too much.
Right now our deficits with China and the EU are $347 billion and $146.8 billion, respectively. As the nearby chart shows, China’s duties are higher than those of the U.S. in 20 of the 22 major categories of goods. Europe imposes higher tariffs than the U.S. in 17 of 22 categories, though the chart does show that the EU and China are much different regarding tariff rates.
The EU charges a 10% tariff on imported American cars, while the U.S. imposes only a 2.5% tariff on imported European vehicles. Today Europe exports 1.14 million automobiles to the U.S., nearly four times as many as the U.S. exports to Europe. China, which is the world’s largest automobile market, has a 25% tariff on imported vehicles and imposes even higher tariffs on luxury vehicles.
What we see is a massive move by both the EU and China to protect their goods, demand we continue to purchase them while penalizing our own, this is not acceptable and has to stop.
We hear talk of a trade war, and the reason is simple, administration after administration has signaled to both the EU, China, along with other nations that this was an acceptable way of doing business, what we have seen is nothing short of a massive transfer of wealth from the US to competing nations. Trump has seen this, has decided this is not only unjust, but it is also not in the best interest of this nation.
As this has gone on our manufacturing base has closed down, it is hard to compete with foreign sales when they not only have cheaper labor to fight against us, even if we are using automation to offset the cost of labor, but they are also, as seen in the chart above, using tariffs to take away our ability to compete.
People fail to understand when you have experienced a massive advantage on your side with trade, one that has allowed you to grab enormous wealth from your trading partner, are you going to be willing to give that advantage up without a fight? Of course not, and that is exactly what is going on, but it does not mean it has to be the way things are.
China, which has a population of 1.4 billion people, with a growth of 11.6% a year, the simple truth is they can’t produce the crops needed to sustain their population, even though they do lead in such categories as Rice and Wheat crops, it is not enough to be self-sustaining, this is why they also lead the world with imports of food, without it they would face starvation.
While I know many will pull back in shock at this suggestion, the need to consolidate the power of the food producing nations to stop the protectionism and tariffs from others, this needs to be done. A great example is China again; you can Europe and Arab nations doing this as well. They demand we give food they need, but then the Arab world jacks up prices of oil, the Chinese and Japanese put on tariffs on the food they don’t want, but demand we give what they want without any of this being done ourselves. Europe meanwhile does this with the equipment they manufacture for planting and harvesting this food, then put their tariffs to protect their own home produced goods, all while denouncing the US and the Trump administration for daring to do the same thing.
What America needs to do is put togather a group or coalition of top food producing nations, here is a list as we know them now:
Corn United States 50.1% ($9.1 billion)
Fish China 9.2% ($6.6 billion)
Palm Oil Indonesia 51% ($10.4 billion)
Rice Thailand 34.5% ($6 billion)
Soybeans United States 50.5% ($16.5 billion)
Wheat United States 18% ($5.4 billion)
Beef Brazil 19.6%
If we had the US, Indonesia, Thailand, Brazil, and Austalia along with Argentina in a coalition, like say, OPEC has, we could tap down the protectionism that we see other nations are pushing against us. If Arab nations wish to put in place a sharp rise on oil prices, that is fine, see how they do with a 50% tariff on all food products, if China wants to demand the right to charge tariffs on our goods, while protecting their own, see how long they do this with a 50% increase of cost of food that we are shipping to them.
I know people are going to say food should not be used as a bargaining chip, but I have to ask is it any different if you use oil, tractors or anything else? You raise the price of oil; you force the farmers to make less due to the cost of fuel, the same with equipment, you charge more for this, you find the farmers have to eat into their profits to produce the goods due to the higher start-up cost of purchasing tractors, ect..
If nations like Europe, that have far too large of a population to feed with the current arable land they have, if they are going to put tariffs on our products, that is fine, we will add one to the food we are shipping, use this to reimburse our farmers who have to otherwise absorb the losses.
We should start this up and call it OFEC (Organization of Food Exporting Nations).
National Security Need
A trade war is a terrible thing, but I also chose to look at what would happen. If nations like China put up tariffs and make their goods suddenly become too much, we will then find a need to move to manufacture back to the US; we have many empty manufacturing plants, maybe it is time to start using them.
There is also a national security need. If we are dependent on goods from China and everywhere else in both our civilian sector and with our military, what happens in a time of war when this is suddenly cut off? What do we or other nations then do? Is it not better to keep a manufacturing base at home, if needed we could ramp up domestic production, but it is not so easy when you aren’t doing anything, have no infrastructure in place to have to start this up. If you have the facilities in place that are already doing this, you have a base from which to expand.
Other nations have no problem spying on the US to steal our tech, China is so bad they do this, then flaunt it in our face when they do. Maybe we need to deal with this by figuring what the cost of developing this tech is, then charge off our national debt they own the cost of research and development, add to this loss profits if we would sell this to them.
And not only do this to China, one of the worse offenders is France, tell them and any other nation, if you are caught with industrial or military espionage, hacking our computers, we will either charge off of our national debt, if you own some, or maybe we can seize assets to cover the cost.
If a person steals from you, and you are caught, you have to give compensation, if you can’t, assets are taken to make sure the compensation is given, why should nations be any different?
We are seeing a change in this perception under President Trump, under prior administrations it was ignored, and that is a wonderful thing, but we need to level the playing field more. Just because I have something, does not give you the right to take it from me, that is stealing, whatever you use to justify your actions does not negate that issue that you were stealing, we need to address this not only at nations but I would say at companies as well.
If this process is painful, but we, in the end, can put a halt to this, it will be worth it. If we can’t, then maybe we need to start pulling our manufacturing back home, let countries know, if you are going to trade with us, it will be an equitable and fair trade, or you will pay the price for this.
I am tired of the US giving and getting nothing but being demonized in return. Of sending aid to nations, yet they work against us, many times using the very aid we give to do so. It is time to use smart politics, we don’t need to give to our enemies, and neither they or our friends are entitled to take from us, just because they think we owe it to them.
The US controls far more power then many realize. We are at the point where we are now able to have enough oil and gas not only to be self-sufficient if needed, but we could export in times of need to aid our allies. We and a few other nations control most of the production and export of food products, and we still have a wealth of natural resources. If these nations come under an oil embargo because the nations that are part of OPEC wish to play hardball, we can meet their needs for the period needed until this stops, can the oil-producing nations do the same with their food production?