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EXTREMES BEGET EXTREMES A Balanced Approach to Global Trade and the Role of Governments

EXTREMES BEGET EXTREMES A Balanced Approach to Global Trade and the Role of Governments . Free Trade. Currency Manipulation.

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EXTREMES BEGET EXTREMES A Balanced Approach to Global Trade and the Role of Governments

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  1. EXTREMES BEGET EXTREMES A Balanced Approach to Global Trade and the Role of Governments

  2. Free Trade

  3. Currency Manipulation “Greater scope for market forces to determine the value of the Yuan would reduce an important distortion in the Chinese economy, namely the incentive for Chinese firms to focus on exporting rather than producing for the domestic market.”Federal Reserve Chairman, Ben Bernanke, December 2006.

  4. Currency Manipulation • Nations undervalue their own currency to gain an unfair advantage in global trade. • RESULT: • Exports are cheap, and imports are expensive. They sell their goods, but don’t buy others’ goods. • China undervalues its currency up to 40% in relation to the U.S. Dollar to make its goods cheaper. People buy Chinese goods because they are cheaper than the same goods made in America. If China ended its currency manipulation, the U.S. economy could grow by as much as $250 billion and 2.5 million new jobs!

  5. Currency Manipulation • How China Does It: • Purchasing American Treasury Bills • This creates debt for America and floods our markets with cash, which when done over time helps maintain the undervalue of the yuan. • “Surrender Requirements” • People with dollars in China are forced to turn them in for yuan to the Central Bank, which controls the exchange rate. • 3. Government Control of Business • Many corporations are owned or controlled by the government, which uses profits to buy more financial instruments to control the currency value. America’s trade deficit with China is increasing by about $1 Billion per day!

  6. U.S. Dollars per Chinese YuanExchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  7. U.S. Dollars per Malaysian Ringgit Exchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  8. U.S. Dollars per Thai BahtExchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  9. U.S. Dollars per Indonesian Rupiah Exchange Rate (1995-2010) Source: Pacific Exchange Rate Service

  10. U.S. Dollars per Japanese YenExchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  11. U.S. Dollars per South Korean WonExchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  12. U.S. Dollars per Taiwanese DollarExchange Rate (1993-2010) Source: Pacific Exchange Rate Service

  13. Source: U.S. Bureau of Labor Statistics, Not Seasonally Adjusted U.S. Manufacturing Jobs(in thousands) June 1998 17.7 Million Jobs September 2010 11.8 Million Jobs Nearly 6 million manufacturing jobs have been lost since manufacturing last peaked in 1998

  14. U.S. ManufacturingAs a Percentage of Gross Domestic Product 45% Drop Source: US Department of Commerce, Bureau of Economic Analysis (BEA). Manufacturing Industry value added as a percentage of GDP (Apr. 9, 2008).

  15. The State Crisis: Manufacturing Jobs LostJune 1998 to September 2010

  16. Wal-Mart’ing of AmericaEmployment in Manufacturing vs. Retail Sectors Less Manufacturing Jobs now than any time since 1941! Average Manufacturing Job: $23.31 /hr Average Retail Job: $15.70 /hr Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Survey, Not Seasonally Adjusted; Average hourly Earnings of All Employees

  17. World ExportsAs a Percentage of World Gross Domestic Product Source: International Monetary Fund, World Economic Outlook Database, Oct. 2010

  18. Manufacturing Jobs vs. Trade Deficit(2000-2010) Trade Deficit Manufacturing Jobs Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics

  19. U.S. Trade Deficit(1997-2010) China will Account for almost 40% of the U.S. Trade Deficit in 2010! Source: U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars U.S. Census Bureau

  20. U.S. Trade DeficitTop Trading Partners 1997-2010 255 % 423 % 368 % 359 % 94 % U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars, estimated through Dec. 2010; U.S. Census Bureau

  21. Value of U.S. Dollar (1973-2010) (as valued against currencies of major U.S. trading partners) Feb. 1997 Sept. 2010 Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index)

  22. Trade Deficit vs. Value of U.S. Dollar(2000-2010) Trade Deficit Value of U.S. Dollar (Trade Weighted) Source: U.S. Census Bureau, U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index)

  23. Manufacturing Jobs vs. Value of U.S. Dollar(2000-2010) Dollar Spikes - Jobs Vanish As industry declines, dollar follows Value of U.S. Dollar (Trade Weighted) Manufacturing Jobs Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Labor Statistics

  24. The Dollar Goes Up – Manufacturing Profits Go Down! Value of U.S. Dollar (Trade Weighted) Manufacturing Profits (As Share of National Income) Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Nati’ Income w/o Capital Consumption Adj. by Industry

  25. Declining U.S. Industry • Machinery • Autos • Textiles • Lumber/Paper • Chemicals • Aerospace • Metals

  26. Endangered Manufacturing Industries 70% 78% 64% 72% 58% 62% 53% 51% Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Survey, Not Seasonally Adjusted

  27. United States Steel Imports Source: U.S. Census Bureau

  28. Chinese Steel Production(1998-2010) Estimated 630 mmt in 2010 Total Production of Crude Steel – World Steel Association, Steel Statistical Yearbook 2010

  29. Chinese vs. U.S. Steel Productionin Millions of Metric Tons Total Production of Crude Steel – World Steel Association, Steel Statistical Yearbook 2010

  30. U.S. - China Direct Investment(2000 – 2009) $49.4 Billion $791 million Source: The U.S. Bureau of Economic Analysis, Direct Investment, Direct Investment Position on a Historical-Cost Basis

  31. The Dollar Goes Up – Manufacturing Investments Go Down! Value of U.S. Dollar (Trade Weighted) DomesticManufacturing Investment (As Share of Investment in Private Fixed Assets) Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Investment in Private Fixed Assets by Industry

  32. The Dollar Goes Up – Investments Go Overseas! DomesticManufacturing Investment (As Share of Investment in Private Fixed Assets) U.S. Direct Investment in China Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Investment in Private Fixed Assets by Industry

  33. Major Issues in International Trade • Currency manipulation • China and other Asian countries keep the value of their currencies artificially low to make their exports cheaper and imports more expensive • Subsidies • China has provided billions of dollars in subsidies, directly and indirectly, to its steel industry • Attempts to weaken the trade laws • Multinational corporations that want to be able to rely on dumped and subsidized merchandise • Climate change • Some solutions would encourage U.S. manufacturing to move to China and elsewhere, leading to greater greenhouse gas emissions

  34. Trade Distortions: Do More. Determining the best path forward for America is not just the responsibility of the government and major corporations. The ultimate responsibility for the future of America lies with informed American voters. Your vote is your voice, and you have the right to be heard. Speak up for your jobs, your families, your country, and your future. Know More. Do More. Nucor.

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