Politicians who favored the low consumer prices provided by globalization found their policies increasingly unpopular when the supply chains recently went kerplunk. Now that a dysfunctional supply chain ranks among the inflation culprits, both sides of the aisle appear ready to commit to a Made in USA strategy. Such a national policy will inevitably make hauling goods from the heartland to Main Street USA a shorter and more productive endeavor.
A recent Wall Street Journal article, called “Retreat From Globalization Adds to Inflation Risks,” makes the long-held case that cheap products are good for American buying power. While few would dispute that accepting poorly crafted Chinese products at bargain-basement prices allows Americans to own and enjoy all the gadgets their hearts desire. The data used to support this scare-tactic article make a seemingly convincing case.
“Economists Robert Johnson of the University of Notre Dame and Diego Comin of Dartmouth found in a 2020 paper that international trade had the effect of reducing U.S. consumer prices by an annual 0.1 to 0.4 percentage point between 1997 and 2018,” the Wall Street Journal asserts.
The piece leaves out the fact imports are not made to last or that millions of manufacturing jobs have been exported. But after peaking in 2011 at 26.5 percent, global manufacturing declined to 23.5 percent in 2020. Trade policy hawks largely attribute the most recent reduction to the Trump Administration’s trade war with China and growing discontent with outsourcing. That may be why the Biden Administration has followed suit with the popular Made in USA mantra and included it in the recent $1.2 trillion infrastructure spending package. Embedded are Made in America procurement rules that seek to accomplish the following.
- Expand domestic preference procurement policies applicable to federal financial assistance programs for public works infrastructure.
- Increase the domestic component content requirements of products and construction materials sold to the Federal Government under the Buy American Act.
- Provide transparency into governmental contracting decisions related to domestic sourcing.
“Biden has not only continued Trump’s trade policies but has amplified them with stricter ‘Buy American’ provisions, local content requirements, and pro-union proposals on electric vehicles and batteries in the new spending bills,” economist Gary Clyde Hufbauer reportedly said.
It’s a fool’s errand to argue that Made in USA products are less expensive than Chinese knock-offs. But the loss of manufacturing, mining, and other jobs sets the country on a course to go off a financial cliff. During the trade war with China, the U.S. enjoyed historic lows in unemployment and poverty. Weren’t Americans better off when globalists were howling at the moon decrying “isolationism?” And how did that impact truck drivers, compared to right now?
The country has more difficulty unloading cargo ships, delivering goods, and storing empty containers bound for nowhere today. Truth be told, decoupling the economy from global manufacturing plants and refocusing on Made in USA products may allow freight, logistics, and agricultural operations to haul goods and materials more efficiently.
We heard this “sky is falling” narrative during the U.S.-China trade war, and, frankly, the trucking industry ran smoother, and Main Street USA didn’t struggle as mightily. That may be why globalists in the Biden Administration tout imports on the one hand and sign legislation requiring Made in USA goods and materials with the other. It seems both major political parties want to stay in voters’ good graces. Shortening truckload miles and buying Made in USA cannot possibly exacerbate inflation topping 40-year highs.
Sources: wsj.com, jdsupra.com
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