Context:
The international trading system has failed America and other trade deficit countries, mainly because free trade doesn’t truly exist. The global economy has become distorted by countries like China, Germany, and Vietnam, which manipulate policies to run chronic trade surpluses. This imbalance has led to massive economic consequences, including job losses, wage stagnation, and declining industrial competitiveness in the US and other deficit nations.
Global Trading System
The global trading system, also known as the international trading system, is a network of rules and agreements between countries that govern the import and export of goods and services.
Key Highlights:
The Failure of the Global Trading System
The system hasn’t failed because free trade doesn’t work, but because true free trade has never existed.
- Certain countries, especially China, have rigged trade in their favor through:
- Government subsidies
- Market access restrictions
- Currency manipulation
- Predatory industrial policies
- The balance is indicated by China’s $1 trillion trade surplus in 2024.
Effects on the US and other Deficit Countries
The transfer of US wealth overseas would total $20 trillion over 20 years
- Loss of technological superiority:
- China dominates 57 of 64 critical technologies (per Australian Strategic Policy Institute).
- Lags in semiconductors, shipbuilding, solar panels, and personal computers.
- US economy suffers from trade deficits in 2024: More than half of cars sold in the US were imports. For the first time in history, the US imported more food than it exported.
The Human Cost: Wages, Inequality, and Declining Life Expectancy
Millions of good paying jobs lost, leaving workers poorer. Real wages stagnated for two decades in many industries.
- Growing wealth inequality
- The top 1% owns more wealth than the middle 60% combined.
- Widening life expectancy gap
- Americans without a college degree now live 8 years less than those with one.
The Demand for a New Trade Regime
A system for democratic nations that are mostly free economies. Should find unity and implement a new fair trade.
- Core principle
- Trade needs to be reciprocal or countries export to import, not just to garner wealth and more power.
Proposed Solution: A Two Tier Tariff System
- Higher Tariffs for Non Democratic and Free Riding/Chronic Surplus Nations (e.g., China).
- Lower tariffs for participating democratic economies to maintain trade balance.
- Tariffs adjusted over a rolling three year period to prevent new imbalances.
- Alternatives to tariffs exist, but tariffs are legal, flexible, and enforceable under existing frameworks.
