One of the many unorthodox reasons U.S. President Donald Trump uses to justify his trade wars on the world revolves around the loss of industry in America.
Other countries have “stolen industry’’ from the United States, claims Trump, and he wants to force industry to come back home so the economy becomes what it was in the 1950s.
How this theft of industry happened isn’t clear. Certainly, nobody came to the United States at gunpoint and demanded it to relocate. Nor did anyone break in and steal it in the middle of the night.
What happened was a gradual hollowing out of American industry. The hollowing out was caused by costs.
As American industry grew, so did employee demands for a bigger share of the pie. That formula resulted in an unheard-of standard of living for most Americans. Prosperity reigned.
Higher wages took their toll on profits, so industry leaders sought an alternative source to make products more profitable.
In the years after the Second World War, that source with lower labour costs was Japan. At first, Japanese-made products were of lower quality, but they improved until Japan became a major exporter to the U.S. market.
American industry moved on to South Korea as Japanese costs increased. After new relations were developed with China by a Republican president, China became it.
China became the main source for so many products.
The Chinese dictatorship, not subject to re-election every four years, planned for the future 20 to 30 years down the road.
Those plans included developing a stranglehold on critical minerals, shipbuilding, marine freight and other products.
Voters in a hollowed-out America looked for a saviour to bring back the good old days of industry. Donald Trump gave them the promise of a return.
In an attempt to steal back industry, his massive tariffs and threats have completely turned around world trading patterns.
To admit loss of industry came from living too high would be political suicide. So Trump blames the rest of the world.
Canada has become a pawn in this trade war.
This country’s export industry has been based on a low value Canadian dollar since 1961when Prime Minister John Diefenbaker was in power.
With a few exceptions, the Canadian dollar has been worth less than the U.S. dollar, giving us a competitive edge.
For most of these years, the Canadian dollar ranged between 80 and 90 cents U.S.
Almost 40 per cent of export sales revenue comes from the exchange on the dollar. Canola is priced around $7 a bushel, with about $2.65 from exchange. How many farmers could survive if the exchange were at par?
Canadian exports have been made profitable by an illusion — an illusion that exchange rates in Canada will always be so favourable.
That low value has allowed a considerably higher standard of living than in most of the world, and it seems that Canadians have taken this lifestyle for granted.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
