How we ever agreed for China to fall under the auspices of GATT never ceased to amaze me. A long ago dead person one time told me when I was a lad, we are going to sell rope to our enemies with which they will hang us. I guess your long diatrob underscores his commentary.
I have a problem applying how things worked in the 18th 19th and the very early part of the 20th century to today’s world though. Yes we did fund our government through tarriffs and excise taxes. Yes, tariffs, and quotas, supported US industry. We were a growing nation at that time and pretty much self sufficient. That is not the case today.
I agree we should never have allowed companies to move their production off shore as a consequence of our trade agreements. We did it unfortunately and now the question becomes can we put the genie back in the bottle.
NAFTA was just a hemispherical agreement in furtherance of the road we cut for ourselves.
You also correctly note in that we did nothing to punish cheating like currency manipulations, intellectual theft or out right fraud.
I like you idea of applying a corporate tax rate import fee. It would do two things...raise revenue and decrease imports. Of course consumer costs would go up but I believe the trade off of higher costs verses a lowered trade deficit, support for domestic manufacturing and a lower fiscal deficit far outweigh the costs.
Having been involved in both domestic and offshore manufacturing for over 35 years, in most cases US manufacturing can be competitive with 10% to 20% of Asian costs, if all costs are accurately calculated and the US operation is efficiently managed. Asian quality is difficult to manage and company’s often accept inferior materials or assembly in order to get a better price. Compare apples and apples, plus insist that quality standards will be maintained and the factory will eat the total cost of customer returns and you suddenly improve the cost equation by 5-10%.
Companies often don’t fully allocate actual (not theoretical) transportation costs, administrative overhead costs, and most don’t calculate the higher inventory investment for Asia imports or the real cost of late deliveries. Typically product development costs are also higher due to the need to base PD people in Asia or fly them back and forth. Make sure all of the indirect costs are properly allocated to the imports and the cost equation can improve by another 10%.
Finally, there is the cost to the US taxpayer of supporting imports - the services of customs, the Navy protecting the sea lanes, port construction, harbour dredging, the Coast Guard, as well as maintaining the internal infrastructure used by imports (roads, bridges, airports). If domestic production pays for the use of these services via a 35% corporate tax rate and the Asian factories get a free ride, domestic companies are at a tremendous disadvantage. Assessing a import fee equal to the corporate tax rate would seem to be an equitable way of insuring imports, not the taxpayer, should pay for these very real costs. None of the costs of maintaining the import infrastructure should be born by the taxpayer, they should be covered by the users of the infrastructure and services.
Based on how the import supply chain typically deals with rising raw materials on energy and commodities I estimate if we assess a 35% tax rate on imports about 50% of the increase will be passed to the consumer and the other15% will be absorbed in the supply chain or subsidized by the government of the exporting nation. The real economic benefits to the USA will be higher revenue to the treasury as well as real economic incentives (not direct government subsidies) to make existing US manufacturing more efficient and for Wall Street to make investments in domestic manufacturing.
Finally, the government should take a very aggressive approach with respect to non-tariff barriers and subsidies of exports by foreign governments. If we know the Chinese government is rebating 15% of the value of exports to a factory, the US government should assess an additional 15% tariff on imports of that class of goods. If intellectual property laws are being flagrantly violated, imports of that class of goods should be embargoed until the violations subsist. If other nations apply non tariff fees to US goods coming into the country, say a container fee or customs fees, we should be reciprocal in the assessment of these fees.