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Why Doors Slam Shut On U.S.-Made Products

Prof. Peter Morici - 11/16/2006

Timothy Aeppel's four-part series "Still Made in the U.S.A." (Marketplace, Oct. 24-27), which chronicles the success of a wide array of U.S. manufacturers, from those making church organs and surgical instruments to Bobcat, throws cold water on the notion that U.S. manufacturing can't compete. But it raises the question: Why has the trade deficit in manufacturing nearly tripled and the market share of manufactured imports grown from 5.6% in 1998 to about 15.2% this year?

The success stories in your series focused on durable-goods manufacturers, and, indeed, this segment has enjoyed breakneck productivity growth and startling innovation; yet U.S. manufacturers such as Caterpillar and GM keep pushing their suppliers to locate in China, even though tractors and auto parts are quite similar in their requirements to Bobcat's little tractors.

The answer is that the overvalued dollar and foreign subsidies are attracting industries like auto parts and other metal fabricators to China, India and other Asian locations, while Asian governments throw up barriers to U.S. exports. We need to look beyond productivity and ask to what extent lopsided trade agreements and foreign mercantilism are slamming the door shut on high-quality, American-made products.