Tariffs, protectionism mere excuses, won't bring jobs, industry back to US

With Donald Trump back in the White House, the United States continues to use "return of manufacturing" as an excuse to justify tariffs and protectionism, as if international competition alone is to blame for the decline of its "rust belt" and the declining living standards of its ordinary people.

Without fundamental changes to environmental protection issues, labor price and other factors that led to the relocation of industry from the US, can the US revitalize its manufacturing through a trade war? Not to mention that the anticipated return of manufacturing also faces a host of obstacles.

First, the US needs to massively upgrade its infrastructure. Whether it is electricity, water, railways and roads, the US currently does not have the foundation for a large-scale return of manufacturing. Such infrastructure not only requires huge investments, but also takes a considerably long time developing. Given the financial resources and construction efficiency, it is almost impossible for the US to accomplish this task.

Second, the US economy is dominated by the tertiary sector, with services accounting for more than 80 percent of its GDP. That means its industrial structure is seriously divorced from manufacturing. To promote the return of manufacturing the US must carry out large-scale industrial restructuring, but how can changes that do not conform to the law of capital multiplication be achieved?

Third, to bring back manufacturing, enterprises must reduce costs, which requires a weak dollar policy. However, in order to attract international capital to finance its current account deficit, curb domestic inflation, and consolidate the dollar's international status, a strong dollar policy is needed. When these two are in conflict, the US will undoubtedly opt for a strong dollar policy, the cornerstone of its hegemony.

The US' claim that it imposes tariffs and engages in trade protection to prevent workers from other countries taking away jobs of its domestic workers is only a political pretext. Raising tariffs will not only fail to promote the return of manufacturing, but also increase the costs for American consumers and push up inflation in the US.

Economic Daily