PER ASPERA – AD ASTRA I THINK TANK

Ranked Best New Think Tank by 2020 Global Go To Think Tank Index

PER ASPERA – AD ASTRA I THINK TANK

Ranked Best New Think Tank by 2020 Global Go To Think Tank Index

Should Tariffs Be Increased on Chinese Imports of the United States?

Should Tariffs Be Increased on Chinese Imports of the United States?

In 2001, China joined 159 other countries in the World Trade Organization, which exists as an organization where member governments try to sort out the trade problems they face with each other (WTO). This seemed promising at the time for the United States, as the two parties signed an agreement that would open each other's markets for one another, and perhaps now China would gain more of an influence from American capitalism. However, this image of China’s future proved to be far too optimistic. It would continue its poor economic practices even after its admission into the World Trade Organization, namely their use of slave labor, the security threat their companies pose to the United States, as well as their currency manipulation, which in turn increases the United States’ trade deficit with China, as well as causing the loss of American jobs. Therefore tariffs should be raised on Chinese imports.

Human Rights Abuses in Production

As the typical American consumer browses the internet on their new cell phone, pours coffee from their coffee machines, and wears a face mask to protect themselves and others from the spread of disease, they remain blissfully unaware of just how the product they use in their day to day life has been manufactured. As a method of fighting so-called “religious extremism,” the Chinese government persecutes Xinjiang's Uyghur population, or Muslim Turks native to Xinjiang. The Chinese Communist Party accomplishes this through many cruel practices that violate human rights, which include detaining them in prison labor camps, hundreds of thousands of miles away from their home, that is, in turn, forcing them to work against their will, so that they can escape from the so-called “poverty” that they were living in and become integrated within the rest of society. They do so while learning to appreciate the Chinese Communist Party, are forced to abandon their religion and cultural values, and partake in mandatory activities such as Mandarin and ideological training, according to a New York Times Visual Investigation by Muyi Xiao and Christoph Koettl. 

Read more: Digitalization of arbitration: successful future or problematic reality?

Another account from International Cyber Policy Center researcher Vicky Xiuzhong Xu states that even recently between the years 2017-2019, as many as 80,000 innocent Uyghurs from Xinjiang were being transferred through labor markets, most likely from prisons and ‘re-education’ camps they are detained in beforehand. In these labor markets, they are forced to produce goods that are not only consumed in China but internationally as well. “Under conditions that strongly suggest forced labor, Uyghurs are working in factories that are in the supply chains of at least 83 well-known global brands in the technology, clothing, and automotive sectors, including Apple, BMW, Gap, Huawei, Nike, Samsung, Sony, and Volkswagen.” The report, titled “Uyghurs for sale: ‘Re-education’, forced labor and surveillance beyond Xinjiang,” also went into detail on the work environment minorities in China are presented with: Even well-known factories for American brands imprison their workers with barbed wire fences, watchtowers. Such is the case with a Taekwong plant in Qingdao, a company that makes materials for Nike shoes. By participating in free trade with China, we are allowing them to manufacture the goods that we rely on under these kinds of conditions. Given that the United States is a country that strongly believes in human rights and free speech, the thought of partaking in free trade with a country that denies its citizens the rights they are endowed within the Chinese Constitution is deplorable. By imposing tariffs on Chinese products, thus making Chinese products more expensive for the American consumer than domestic products would be, American consumers would be discouraged from purchasing imported products made by human rights abusers such as China, and instead purchase domestic products made by more humane methods.

Source: Financial Times

A Threat to U.S. Security

However awful China’s human rights abuses in manufacturing may be, the potential dangers Chinese manufacturing poses to our security must also be considered. Technology firms such as Huawei have been accused of being a security threat to the United States, which suspects the cellphone company of taking orders from Beijing. The tech-firm has also signed a deal with the Syrian Governments’ Communications and Technology Ministry. Similarly, the second largest Chinese tech-firm, ZTE, was caught breaking sanctions placed against them when they sold American components to Iran, and 283 shipments of servers, microprocessors, and routers to North Korea, in turn violating embargoes set there by the United States. Some internal documents exposed by the United States commerce department showed that ZTE even had plans to distribute not only to countries that we hold a contestive relationship such as Iran and North Korea, but also Cuba, Syria, and Sudan, all of which also have embargos put in place by the United States. Thus, tariffs on Chinese imports will cause China, in turn, to impose retaliatory tariffs on American products, hence reducing the risk of those products ending up in the hands of countries the United States considers adversaries. 

Check out: The Resource Curse: Path toward Stagnation or Development?

Along with their sanction violations, Huawei’s 5G towers have proven to send messages in unencrypted form, which means “Anyone with control of the masts can see what the user’s web browser is sending and receiving when they browse unencrypted websites. That content includes cookies and other data that could identify the user by name,” Huawei’s CEO has denied taking orders from Beijing multiple times. Whether this is true or not, having messages sent in unencrypted form means that anybody can see this at any time, and anyone can request to see the messages, including the Chinese government. “Michael Howard, senior research director at IHS Markit for carrier networks, said the ‘biggest issue is that any and all equipment from any vendor can be compromised by any knowledgeable rogue person.’ That means private actors hacking for money, as well as the US’s fear — government-sponsored actors.” This means that if the United States were to allow any companies such as Huawei into the market, it could potentially risk their Huawei users losing their privacy because their data is not encrypted, allowing anyone to see what the contents of their messages are. Thus, imposing tariffs on Chinese products could discourage American consumers from purchasing them, by extent limiting companies such as Huawei’s foothold in the American marketplace, making it impossible for them to construct their 5G towers in the United States.

Damage to U.S. Economy & Tariff Benefits

Finally, in discussing reasons as to why Tariffs on Chinese goods should be considered, the damage dealt with the United States’ economy should be considered. “The U.S. merchandise trade deficit with China in 2018 was $419 billion (up from $376 billion in 2017), and is by far the largest U.S. bilateral trade imbalance.” A trade deficit means that a country is importing more than it is exporting, and is neither inherently good nor bad. However, if a deficit is large and persisting, it can eventually lead to an entity declaring bankruptcy. Especially since the Congressional Research Service has stated that our deficit with China is the largest, then this should be cause for alarm. Hence, by increasing tariffs on imported goods, consumers would become more inclined to purchase domestic goods instead.

Part of the reason our trade deficit with China is so large is that China has been a known manipulator of its currency. President of the Peterson Institute of economics Fred Bergson explained how exactly this is done: “China has intervened massively in the foreign exchange markets for at least five years, buying at least $1 billion every day to keep the dollar strong and its renminbi weak.” By undervaluing its renminbi to our dollar, China is essentially lowering the price of its exports and eliminates its trade deficit. This is how China discourages imports and encourages the use of domestic products.

The manipulation of China’s currency has had drastic effects on United States manufacturing jobs. As Edmund L. Andrews accounted in his New York Times article “U.S. Adds Punitive Tariffs on Chinese Tires”: “American imports of Chinese tires tripled between 2004 and 2008, and China’s share of the American market grew to 16.7 percent, from 4.7 percent, according to the United States Trade Representative. Four American tire factories closed in 2006 and 2007, and several more are set to close this year.” This is just one of many examples of how Chinese manufacturing has killed off manufacturing in the United States. The reason many of the products Americans use in their day to day lives are produced in China, although coming from American companies, is partly because manufacturing there costs significantly less in China thanks to their devaluing of the Renminbi to the Dollar. As a consequence, 3.7 million United States jobs were lost, and manufacturing jobs in the Steel and Aluminum industries continue to be threatened to this very day.

Visit: Artur Koldomasov for ‘New Europe’ - Ukraine’s information policy needs to be overhauled to combat both external and internal threats

So what kind of benefits can tariffs bring? By increasing tariffs on foreign products, the United States is by extent encouraging more spending towards their products rather than products imported overseas, while also restoring American manufacturing jobs. In recent years, this Trade War has shown success in bringing back American manufacturing jobs. With these continuous tariffs on imports, this now also opens the possibility of manufacturers relocating outside of China, to avoid paying tariffs. “Of the $31 billion in U.S. imports that shifted away from China, some 46% was absorbed by Vietnam, sometimes by the same Chinese suppliers who left the mainland. Vietnam exported an additional $14 billion worth of manufactured goods to the U.S. in 2019 versus 2018 as a result of that shift.” By shifting manufacturing to Southeast Asian countries such as Vietnam, importers now do not have to pay as much of a tariff on these goods, hence creating less of a cost for our manufacturers importing goods. 

Source: Financial Times

Conclusion

Although it remains a controversial topic, raising tariffs on Chinese goods will prove to be a better option for the United States in the long run. This would mean that manufacturers would be pressured to move out of China to export goods to the United States so then United States consumers would not have to pay the tariff on imported products that they would if the product was manufactured in China. Hence, these products would not be made utilizing the same labor from enslaved minorities like they are in Chinese factories, further aligning with our humanitarian values, and this would make the American market less approachable for Chinese companies that are accused of being security threats to the United States, such as Huawei and ZTE. 

Written by Alexander Pepper, Grand Valley State University (United States), Major in International Relations