Red Chili Sausalito Unisex – Black – Climbing Shoes Lace-up Red ChiliRed Chili
In 1776, Adam Smith stated:
"It is the maximum for every gentle champion in a family, never trying to make at home what it will cost him more to do than buy. If a foreign country can do it, better buy it from them with some of our products. own industry, employed in a way that we have some advantage. "
This is the natural order of the economy. Tariffs try to disrupt this economy law. The tariffs adjust wages by introducing a tax amounting to an economic adjustment. The need for duties is supported by the argument that because people in lower wage economies make money on the dollar compared to workers' higher wage economies, higher wage economies will experience high unemployment in relation to the lower wage economy. This is not true based on economic theory established by David Ricardo in 1810 and empirically supported.
A workforce in a higher wage economy is specialized and it receives improvements in the efficiency of the things it does well. Consider the pay economy when manufacturing Nike shoes versus aerospace products.
According to Matthew Kish, in his May 20, 2014 article, Nike pays its contract factory workers in Vietnam $ 73.94 per month, which is in the higher portion of the shoe factory pay scale (workers in Bangladesh earn $ 36.01 per month reported in the same article). This salary is equivalent to $ 0.43 / hour based on a typical United States working year of 2,080 hours. Manufacture of shoes requires unprocessed and semi-finished labor to manufacture; therefore, the barrier to entry is low. The pay gap between Vietnam and the US is impossible to overcome, so it's very unlikely that Nike shoes will be manufactured in the US
According to Statista, the United States, with data from the Congressional Research Service, exports more than $ 15 billion in aerospace products to China, and this volume is growing year after year. The average aviation industry operator makes $ 30.17 per hour or $ 5,229 per month, according to the U.S. Department of Labor Bureau of Labor Statistics. Manufacture of aerospace products is highly specialized and manufacturers are constantly improving manufacturing efficiency to achieve a high barrier to entry.
In April 2010, Phillippe Martin, Thierry Mayer and Mathias Thoenig published that free trade agreements lead to political peace because the opportunity cost of war is too high. The authors say that financial gains and security gains are complementary and if trade gains are not realized, the security benefits are jeopardized.
In the first place, the US is unlikely to accept $ 0.43 per hour to make shoes and Chinese workers and infrastructure are not prepared to make $ 30.17 per hour to make aerospace products. It is highly unlikely that tariffs will create long-term, meaningful changes in the trade imbalance based on the two basic examples. Tariffs can jeopardize US security interests in Asia, such as the South China Sea, Taiwan, the Korean Peninsula, Japan, etc., as opportunity costs for conflicts are lowered. Part of the current US trade dispute with China is about technology theft.
While living in Malaysia, I witnessed Chinese theft of American technology. I think technology theft is much more complex than a toll-driven solution can provide.