Message 86 of 86 (838210)
08-16-2018 6:44 AM
Trump's tariffs just cost Chicago hundreds of jobs (moving plant to Mexico)
How is it that Trump has the power to do such damage?
I will tell you after you read the article.
Chicago-area manufacturer to lay off 150 people as it moves operations to Mexico, in part to avoid tariffs on Chinese metal
By Alexia Elejalde-Ruiz, Chicago Tribune
9 hrs ago
A manufacturer of storage safes is closing its two Chicago-area factories and moving operations to Mexico, in part because of the Trump administration's tariffs on metal from China.
Stack-On Products plans to lay off 128 people at its facility in Wauconda, Ill., and 25 people at its McHenry, Ill., plant when it closes both facilities Oct. 12, said Al Fletcher, human resources director for Alpha Guardian, the Las Vegas-based parent company.
"The operation is really not profitable," Fletcher said. He said the decision to relocate operations to Juarez, Mexico, was made about two months ago when President Donald Trump announced tariffs on numerous goods and materials from China as well as other countries, to reduce what the president has called an unfair trade deficit.
"Mr. Trump is part of this," Fletcher said. So far, the United States has imposed tariffs on $34 billion of Chinese technology goods and $3 billion of Chinese steel and aluminum, and has proposed another $16 billion.
Stack-On, which has operated in the Chicago area for 40 years, makes storage products ranging from tool boxes to gun vaults that are sold at Menards, Walmart and other mass retailers.
The company already has a plant in China and another in Mexico, and its only U.S. factories were the two in the Chicago area, Fletcher said. The layoffs affect manufacturing jobs, warehouse jobs and some office staff, and those employees will be given the option to relocate to El Paso, Texas, just over the border from the Juarez plant, he said. Engineering and sales and marketing employees will be retained and relocated within the Chicago area.
The 153 layoffs at Stack-On are among 885 coming job cuts that Illinois employers reported last month to the state's Department of Commerce and Economic Opportunity. The Illinois Worker Adjustment and Retraining Notification Act requires employers with at least 75 workers to notify the state 60 days in advance of a plant closing or mass layoff that affects at least a third of the workforce.
Visit the Chicago Tribune at www.chicagotribune.com
Now, how did Trump happen to get such power?
Well, protectionism was always bad.
But the Smoot-Hawley Tariff Act of 1930 made the average tariff 60%, so things got real bad.
But, four years after that dreadful act, Roosevelts Secretary of State Cordell Hull came up with an idea. He was faced with a pro-trade congress (Democrats were pro free trade if they came from the south, and there was a pro free trade party base in a party that swept into power), and he simply could have gotten the congress to lower the rates.
That would not really do the trick if the nation was to have a better chance of maintaining lower tariffs.
His big idea was to get congress to give the President the authority to simply proclaim tariff rates (up or down at whatever percentage rate).
And it was a great idea, because he knew future congresses would just raise tariffs, even if a current congress was willing to move in a direction of lower tariffs.
The Reciprocal Trade Agreements Act of 1934 was it.
That allowed the President to choose the rates.
That answers the question about how Trump has the ability to jack up tariffs.
But, I should add that the post World War 2 GATT gave major world trading partners an opportunity to have "rounds" to negotiate broad tariff reductions that cross multiple countries at once. Once an agreement was made then all countries would cut rates. The President was able to get big benefits all at once.
There were 3 major rounds that were most important.
Kennedy Round (1963-1967)
Tokyo Round (1973-1979)
Uruguay Round (1986-1994)
(The Doha Round began in 2001 but failed due to anti-trade opposition)
These brought tariffs down to around 3%.
But Trump i jacking them up.
The WTO was the successor to GATT.
China joined the WTO in 2001 and their average tariffs (on ALL nations) have fallen from over 15% in 2001 to 9.8% today. They have tariffs averaging under 5% on the United States.
And our trading relationship has helped create hundreds of thousands of additional solar installation, metal-part manufacturing jobs, car jobs (among many others) IN ADDITION to jobs created by Chinese consumers buying our products directly.
Never mind the much lower interest rates we enjoy to to Chinese investors purchasing our government debt.
But Trump is demonstrating just how beneficial (and crucial) China has been to our nation's economic growth, by disrupting the free flow of goods.
(Trump claims he is attempting to lower tariffs, but tariffs were already coming down DARN SEMI-FAST, relative to the historically glacial nature of worldwide progress on free trade, before he came along. And if China did lower tariffs even further, then he would just complain about "intellectual property" next. This trade policy of Trump is not a helpful thing)
Trump (based on his policies & actions and words) misses the point on immigration and trade. We should want China to do well because we do well when China does well.
China is projected to have PPP per capita income above 35% of our per capita income level for the year 2022 (which will begin a little more than 3 years from now), and that is a milestone that we should celebrate, because in 2016, China was below 30%.
We need to celebrate the great progress we have all made, and not miss the fact that Chinese growth helps us in a major way.