Proposed and existing tariffs will affect global markets. Announced tariffs on steel, aluminum, washing machine, and solar panel imports into United States (US) markets are currently a major economic issue in the news nationally and globally related to global markets. The Trump Administration commitment to renegotiate international trade agreements like the North American Free Trade Agreement (NAFTA), withdrawal from the Trans-Pacific Partnership (TPP) and Paris Climate Accord, and trade sanctions related to efforts to end the Iranian and North Korean nuclear weapon and ballistic missile programs further complicate discussions about tariffs and global markets. Global markets also complicate projections of the impacts of tariffs on the global and US economy and the potential for retaliatory tariffs or other market reactions by other nations. Trade wars are the fear of tariff opponents.
The Trump Administration claims that the US is in danger of losing adequate steel and aluminum capacity to manufacture military equipment during a time of war. The purpose of proposed tariffs is to correct these critical steel and aluminum production capacity issues as a matter of national security. Although US steel and aluminum imports from China are below 10%, the fact that China often floods the world market with these products drives the international price down. Flooding US markets with Chinese steel or aluminum in this situation, often through other countries, makes it even more difficult for US firms to compete in global markets. Since these prices are determined by global markets, China does not have to flood US markets with steel and aluminum to force prices too low for US companies to be competitive. The issue is whether or not tariffs could be maintained long enough to rebuild US steel and aluminum and whether or not global retaliation and potential trade wars would negate the effect of the tariffs.
Causes for the significant decline of US manufacturing in general as well as our steel and aluminum industries are complicated by global markets. Our previous federal tax codes, environmental, health, safety, labor, and zoning regulations add to the costs of products manufactured in the US. Environmental impact assessments, zoning issues, and permitting often take years to complete for large projects adding significant costs and delays for new facilities or expansions. These extra costs, which many of our competitors in do not incur, adversely influence US product competitiveness in global markets. In addition, any construction or natural resource extraction project in the US that is opposed by a significant part of the population can be delayed by demonstrations due to the right of the people peacefully to assemble. Legal actions in our state and federal courts often delay or halt these type projects which can reduce capacity, increase costs, and decrease our competitiveness in global markets.
In the US, we value clean air and water and the health, safety, and well-being of our labor force. Consequently, the extra costs that we require our manufacturers to incur, and the resultant competitive disadvantage these costs bring, is also part of the calculation that corporations make to locate manufacturing facilities in the US or to locate or relocate facilities to less restrictive countries. For the labor force in Western Europe, North America, and especially the US, progressives and the labor movement have achieved comparatively high wages and benefits compared to other parts of the world. The success of progressives in the environmental and labor movements has resulted in contradictory outcomes related to national and global aspirations which directly influence global corporate capital expenditure decisions related to global markets.
The result is a globalism contradiction for the left, the labor movement, and US capitalists. One of primary goals of progressives on the left is wealth redistribution or income equality on both the national and global scale. In the US, the labor movement has gained wages, benefits, and safe healthy work environments that are the envy of much of the world. Unfortunately, progressive and labor successes in the US are significant reasons for the decline of US manufacturing and competiveness in global markets. The total costs of expenses related to labor, the additional costs related to the anti-capitalist progressive environmental agenda, and progressive taxation resulted in factory closures in the US as corporations relocated factories and jobs to developing countries. The factories built in developing countries are new state-of-the-art facilities built at lower costs and greater worker productivity capacity than the outdated US factories that were closed or remain in the US. The compensation for laborers in the developing countries raises the standard of living for them that multiply as it spreads in local communities. Labor costs in the developing world are usually far lower than similar costs in the US but often much higher than wages before new factories open. In the US, factory closures increase the size of the labor pool for a declining number of manufacturing jobs in old factories now competing with state-of-the-art developing country facilities. Under these circumstances, the US manufacturing labor force is faced with declining number of jobs in old productively disadvantaged factories which can result in lower or stagnant wages and benefits. This is the globalism contradiction for the left. Consequently, in global markets, wealth is being redistributed, but the redistribution is from the labor force in the western industrialized nations to the labor force in the developing nations of the world.
The globalism contradiction for US capitalists and capitalists in the rest of the industrialized west is closely related to the success of progressives and the labor movement and the resultant cost of manufacturing land, labor, and capital improvements. Since the purpose of international manufacturing conglomerates is to maximize corporate profit, cost reduction is an essential responsibility of corporate executives and board members. This necessity stands in direct contradiction to the goals of nationalism, patriotism, and any since of obligation to the labor force, communities, states, and the United States of America, all of which, supported US corporations as they gained economic dominance in global markets. In my opinion, corporations founded in the United States, should give significant consideration to the fact that they would not be in their current global economic situation without the United States of America. These corporations have a debt to pay to We the People who supported their rise to positions of global economic power. This obligation is at the heart of the globalism contradiction for US capitalists.
The tariff and trade negotiation package announced by the Trump Administration is a complicated and aggressive plan to reinvigorate the US steel and aluminum industries and our manufacturing in general in global markets. During a time of war, the United States must be able to support its military with the best equipment available and supply the needs of the population supporting any war effort. This requires a complete manufacturing base. This is one of the primary objectives of the Trump Administration’s goal to Make America Great Again.
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