Understanding the Trade War: Tariffs, Deficits, and Manufacturing

Silver CoinsCoin CollectingEconomicsTrade War

May 18

The term “trade war” has been around for decades.

Economists have used the term to describe economic conflict between opposing countries since the 1950s.

But, President Trump began to use the term regularly during his first term as President, thereby driving it into our lexicon of commonly used words. His ire was specifically directed towards China. Chris’s newly released coin, Trade War, dramatically and beautifully, demonstrates this conflict.

trade war silver coin | usa china tariffs | silver shield — *2025 "*Trade War" Proof Round, by Chris Duane

In 2018, the United States was importing $539 billion in products from China, while the U.S. was only allowed by China to export just $120 billion of our products to their country. That same year, President Trump imposed 30-50% tariffs on washing machines and solar panels imported from China. He later foisted 25% tariffs on imported steel. In addition, he levied a 10% tariff on aluminum from all countries, including India, but these taxes were again aimed primarily at China. Although our exports to China were reduced to $52 billion, these measures reduced Chinese imports more, settling at $219 billion in 2019.

President Trump has continued to press the term, trade war, into our collective memory during his second term in office as he aggressively tries to reduce our trade deficit with China, which rose again under Biden. Chris’ coin, Trade War, highlights this ongoing economic battle.

The conflict began very unassumingly with President Nixon’s historic visit to China in 1972, which normalized diplomatic relations with Communist China. Not surprisingly, we experienced our first trade deficit with China in 1985 when it rose to $6 billion due to their cheap labor.

Losing the trade war to China started in earnest in 2000, when the Republicans in Congress passed a bill titled, United States-China Relations Act, which President Clinton signed. This bill granted “MFN” (Most Favored Nation) status to China.

This was the beginning of the end. China began using its “slave labor” to produce its products, which they dumped onto the U.S. market. They then pegged the Chinese yuan to the American dollar, which made their exports even cheaper to import. American consumers like to get bang for their buck, so the U.S. consumer was happy. However, our American manufacturers were not, and they began to drop like flies.

Since 2001, nearly 90,000 U.S. manufacturing plants have shut down

…because they simply could not compete with China’s slave labor and still maintain the standard of living American workers rightfully expected.

Today’s American factory worker makes between $30,000 and $43,000 per year. In China, factory workers earn anywhere from $2,300 to $12,000 per year, depending on the region and industry. The United States hasn’t seen those types of low annual salaries since the 1940s. There is no way we can maintain our standard of living and still compete with those abysmal salaries.

trade war silver shield coin | china tariffs | chris duane — “Trade War” – Silver Coin Proof

As a result of this rigged playing field, we will never win this economic war without tariffs. And worse yet, we will continue to lose our sovereignty to China as it continues to devour our American manufacturing plants and usurp our economic independence.

Granted, we may temporarily see some products go up in price. But consider this: who can honestly say that raising the unbelievably low price of a girl’s short set, for example, from $11.00 to $15.00 will keep a mother from buying it? Especially when you consider that a girl’s short set still costs today exactly what it cost in 1972! It’s simply a Chinese smoke and mirrors scam to destroy the U.S from within.

In all honesty, we could do with LESS clothing. How many people do you know whose dressers, closets, and storage units are overflowing with excess clothing, much of which has never been worn?

These “deals” at Walmart are deadly. They are not worth the loss of American jobs or the closure of American plants and factories. We need tariffs because it is our only recourse in this lopsided trade war with China.