The United States House of Representatives Select Committee on the Chinese Communist Party (CCP) recently held an important hearing on how to counter the economic threat from China. From both an economic and national security standpoint, China represents the most dangerous threat to the United States. Although China has its own internal economic and political problems it is a growing and expanding economic and military power. A major reason for China’s rise is a direct result of failed United States trade policy. Decades of free trade agreements have resulted in the loss of manufacturing, which has made the United States dependent upon foreign nations, especially China.
In 2001, China was granted permanent normal trade relations (PNTR) or most favored nation status. Advocates for China’s most favored nation status argued that it would be beneficial not only for the United States, but also for China and the world economy. It was also argued that it would help “democratize” China. Further, China promised to comply with the rules of global trade. The result was the opposite. China did not “democratize” nor is it playing by the rules. Whether it is through their economic subsidies of industry, intellectual property theft, devaluing their currency, among other actions, China is not adhering to the rules of fair trade.
As a consequence, the United States is not only running a massive trade deficit, but a large part of that deficit is with China. “Since the United States granted China permanent normal trade relations, our trade deficit has totaled more than $6 trillion, and has averaged $350 billion per year over the past decade,” stated Senator Josh Hawley (R-MO). “In 2022, the $382.9 billion trade deficit with China accounted for 32 percent of the $1.19 trillion total U.S. trade deficit,” noted Andrew Heritage of the Coalition for a Prosperous America. The massive trade deficit with China has also led to a loss of close to 4 million jobs, many of which were in manufacturing.
Ambassador Robert Lighthizer, who served as United States Trade Representative in President Donald J. Trump’s administration, argues that as a result of these free trade agreements, including grating most favored nation status to China, “America’s trade deficits surged as its industrial base fell into a state of near ruin.” Further, Ambassador Lighthizer stated that this is benefiting China’s rise as an emerging “market leader for strategic goods like nuclear power plants, commercial ships, lithium ion batteries, critical minerals, steel, aluminum, high speed railway cars and equipment.”
In addition, these crucial industries help grow and strengthen China’s military strength. “Chinese control of these industries feeds into the growing modernization of Chinese military, which now leads the world across crucial military capabilities including air defense systems, cruise and ballistic missiles, and naval shipbuilding,” wrote Ambassador Lighthizer.
The outsourcing of manufacturing has led to numerous other problems for the United States. The loss of manufacturing has impacted the middle-class, destroyed communities, especially in the Midwest, and helped fuel cultural problems such as addictions to alcohol and opioids. This has also led to a decline in marriages and falling birth rates, while increasing greater dependency upon government welfare programs.
The COVID pandemic also demonstrated that the United States has become too dependent on foreign nations for necessities. Whether this is pharmaceuticals, semiconductors, or other necessities, Americans are starting to realize that growing dependency upon foreign nations is not in the national interest. It is also assumed that outsourcing has only impacted low skilled consumer products such as toys or clothing, but this is only part of the story. Ambassador Lighthizer noted that the “United States once was a net global exporter of advanced technology products,” but “today we run an annual $244 billion advanced technology product trade deficit with the world.”
This is also impacting our national defense. As an example, China is outpacing the United States in building naval destroyers. Ambassador Lighthizer noted that the United States “struggles to build more than two Navy destroyers a year,” while China “is on tract to build at least five destroyers this year.” This is just one example of the growing weakness within the nation’s national defense manufacturing base.
More policymakers are becoming aware of the need to not only encourage greater manufacturing in the United States, but also enact policies that protect American sovereignty and place the interests of workers first. Ambassador Lighthizer argues that a tariff policy is needed to combat the growing threat posed by China. This is echoed by Senator Hawley who recently introduced the Raising Tariffs on Imports from China Act, which calls for a 25 percent tariff to be applied on all goods imported from China. Senator Hawley has also proposed legislation to terminate China’s most favored nation status.
Representative Mike Gallagher (R-WI), who chairs the Select Committee on the CCP, stated that the United States must “stop fueling our own destruction.” The good news is that a growing number of policymakers are realizing that the free trade ideology is not in the national interest.
John Hendrickson serves as policy director for Iowans for Tax Relief Foundation
Author: John Hendrickson
John Hendrickson is a Policy Analyst with Iowans for Tax Relief, West Des Moines, Iowa
