Trade With China Has Hurt the US

I recently came across an article in Fortune magazine titled, Here's Why Donald Trump is Right About China. In the article, Chris Matthews talks about how trade between the US and China has decreased American innovation and as a result, the US has been worse off. He references a study done by the National Bureau of Economic Research that discusses how competition with Chinese exporters has diminished innovation in the US. The study was conducted by comparing research and development spending by US firms against increased import competition. The study showed that as import competition increased, R&D spending decreased in the US.

This study shows that US firms are finding problems in competition with the Chinese exporters, and that is reflected with the increased skepticism toward trade by the average American. While trade is beneficial in theory, something has to be said about the increasing skepticism toward trade by the American public. In a poll conducted by the Pew Research Center, 49% of the American general public said that trade is a "bad thing" compared to only 44% that said it is a "good thing". Imports from China have historically increased since the US opened to trade with them. In 2015, Chinese imports to the US reached an all time high. Could it be that lower and middle class Americans are no longer seeing any benefit from trade due to the increased Chinese imports?

Carrier to keep nearly 1000 jobs in Indiana

When Donald Trump won the presidency, he would not have done it for many reasons including carrying the rust belt states of Pennsylvania, Ohio, Indiana and even Michigan. This past week, the President Elect has reached his first deal to keep nearly 1,000 jobs here in the United States showing he knows what it takes to keep jobs in the United States. One reason as to potential for gaining the deal is roughly 10 percent of Carrier’s subsidiary United Technologies come from the federal government. The Pentagon being the single largest customer of theirs, and threats of losing government contracts could have been a major swing for the decision to remain in the United States. Other incentives include economic from the state of Indiana to further appeal them to remain here at home.

I believe this deal is a revolutionary deal for Mr. Trump because he brings precedent to future companies who want to leave the United States. Creating a tax on companies leaving the United States had been floated and rumored to be nearly 35% and would be able to cause many companies to relocate. If the export tax was being used as payment insurance for the employees losing their jobs this could be a revolutionary idea for the many manufacturing jobs harmed due to trade. We have learned the winners and losers of trade, and while there are about 1000 people winning right now, it could be at the cost to 300 million. Additionally, if this is treated to other companies such as Caterpillar whom also benefit with government contracts, we could see many more saved at the added costs to millions of others.