Why Some Imported Products Are Cheaper

There are a lot of reasons for the decline of manufacturing in America. Many of those reasons are related to trade deficits and the desire for cheap goods, but some are related to the cost of doing business in America. For better or worse, corporations in America who choose to operate within the law are required to pay their employees a minimum wage. We can debate over what that wage should be, but the fact of the matter is that a minimum wage exists. Some other countries have no qualms about employing slave labor or paying people very low wages. The Chinese have used Muslims as slave labor for years. So why would a manufacturing company want to locate in America? There are a number of incentives (in addition to the lowering of the corporate tax rate). America has dependable energy and is moving toward lowering the cost of energy. America protects property rights–the state cannot come in and simply take your business away. Innovation is also protected by patent and copyright laws. America represents a stable environment in which to do business. Changing the structure of tariffs also has moral component.

On May 12, The Federalist reported:

…But Trump’s tariffs were not just economic, they were moral. Rather than relying on foreign countries, particularly China, that benefit from abusive labor practices, Trump put America first by deciding the U.S. must stop pretending inexpensive products come with no human cost. 

…During Trump’s first term, his administration repeatedly highlighted human rights abuses abroad, especially in regions like China’s Xinjiang province, where the Chinese Communist Party is running forced labor camps filled with Uyghur Muslims. More than a million Uyghurs and other Muslims have been detained by China and sent to reeducation camps in what is called the “Xinjiang Uyghur Autonomous Zone” for a range of reasons, including attending religious services, having more than three kids, or texting verses from the Quran. 

China forced many of its religiously and ethnically targeted workforce to toil away in factories, making products distributed and sold across the globe. Muslim slaves in China produce countless store shelves worth of goods, according to the U.S. Department of Labor, such as textiles, hair products, and aluminum, among many other things. They get extremely low pay, can’t contact or visit their families (unless, in some circumstances, they are heavily surveilled by the government), and they can’t leave. 

The article concludes:

Yes, U.S. prices may go up a bit in the short term. Maybe American girls will find two dolls under the Christmas tree instead of 30, as President Trump suggested Sunday on Meet the Press. Maybe U.S. students will sharpen five pencils instead of hoarding 250 like mini office supply tycoons. But maybe underpaid workers in China won’t have to literally slave away making those dolls or pencils for someone else’s kid in a distant Land of the Free. 

President Trump believes temporary price fluctuations are a trade-off worth making in the interim, and he is doing what no other president had the guts to do. There is short-lived pain before lasting progress, and Trump is willing to take the heat now to put human rights and American prosperity over easy profits. 

The Problems With Depending On China For Manufacturing

On Monday, The Daily Caller posted an article about the slowdown in America of solar installations in the third quarter.

The article reports:

U.S. solar installations fell in the third quarter of 2022 and are projected to fall by nearly 25% in comparison to 2021 after the Biden administration began blocking Chinese solar imports from Xinjiang, a region where Uyghur Muslims are allegedly being forced to work, according to a Tuesday report.

The U.S. installed 4.6 GW of solar capacity in the third quarter of 2022, a 17% decrease from 2021’s third quarter and a 2% decrease from the second quarter of 2022 as the government continues to impound Chinese solar panel products under the Uyghur Forced Labor Prevention Act (UFLPA), according to a Solar Energy Industries Association (SEIA) and Wood Mackenzie report. The act, which Congress passed in December 2021, bans imports from Xinjiang due to the allegations that Uyghurs are forced to manufacture polysilicon, a key input in solar panels, exacerbating supply chain constraints and meaning that the total number of solar installations in 2022 is projected to decline by 23% compared to 2021 levels.

The article notes:

China dominates solar panel manufacturing and is responsible for 80% of polysilicon production, according to an International Energy Agency report. In June, President Joe Biden waived tariffs designed to protect domestic businesses from unfair competition in order to get more Chinese solar panels on the market and accelerate his “clean energy” transition.

The Biden administration wants to generate all of the country’s electricity from green energy, such as solar or wind power, by 2035, up from just 40% in 2020. To achieve this objective, the yearly rate of solar installations may need to more than double, according to the Energy Department.

Dependency on green energy is similar to the search for the perpetual motion machine. There may actually be an answer in nuclear fusion, but we are not there yet. Countries like Iceland make use of geothermal energy very successfully, but they also live on top of the volcanoes that produce that energy. I am not sure I like that trade-off.