Beware of politicians who blame China as the destroyer of American manufacturing — they’re just trying to protect their own hides. Take Democratic Rep. Timothy Ryan, who wrote in The Hill that manufacturers in his Ohio Rust Belt district are “not only competing with their counterparts in China — they are unfairly being forced to compete with the Chinese government itself.” He and other congressmen voted this week to support the “Currency Reform for Fair Trade Act,” which would allow the Obama administration to raise tariffs on imports from countries that “manipulate” their currencies.
Such protectionist policy comes with its own perils. On June 17, 1930, President Herbert Hoover signed the Smoot-
Hawley Tariff Act, which Congress intended to “provide relief” for “beleagured farmers.” The act imposed the second-highest tariff rates in U.S. history, leading America’s furious trading partners to impose their own tariffs. This contributed to a 66 percent drop in U.S. imports and a 61 percent drop in exports between 1929 and 1933. Unemployment jumped from 7.8 percent at the time of Smoot-Hawley’s passage to 16.3 percent in the following year, on its way to 25.1 percent in 1933.
Reviving such a policy would wreak havoc on our economy, which is as fragile now as it was then. The Congressional Budget Office notes that new tariffs would raise only $20 million a year, compared to the more than $1 billion a day in trade the United States does with China, and that “many imports do not injure domestic firms because there are no competitors currently operating in the United States.” Not that supporters of the bill seem to mind — it passed the House of Representatives with bipartisan support of 249 Democrats and 99 Republicans and has moved on to the Senate.
Ryan’s campaign and leadership PAC have received over $173,000 from organized labor this cycle, including $56,000 from industrial unions and $48,000 from building trade unions.
These, along with a Congress determined to tax and regulate job-creators until they leave America, have done more than anyone else to send American
If Ryan and others were serious about making America more competitive, they would cut the corporate income tax rate, currently the second highest in the developed world. But they are not serious. The “comedian Congress,” which recently brought in comedian Stephen Colbert to testify, voted on this measure to solidify the Democratic base and create an issue for next month’s election. And the joke is on you.