What trade policies have to do with manufacturing?

Generally, trade policies are seen as hurting manufacturing within the United States.Because of free trade policies, it is just as advantageous to manufacture wares abroad as it is to do the manufacturing domestically.This means that the advantages of cheaper labor, cheaper goods, and relaxed standard in the plants combine to make it preferable to do manufacturing abroad.

There are tax structures in place that are intended to help domestic manufacturing.One of these structures is the Value Added Tax.This tax is used by almost all western trading countries and the tax is passed onto the consumer.Using the Value Added Tax as an example, it is easy to see that trade policy does have a big impact on manufactures.The United States is one of the only Western countries that doesn't use the Value Added Tax.This hurts manufacturing in the United States because the tax acts as a subsidy on products coming into the United States.The items that are manufactured in the United States do not receive this subsidy because the United States does not implement the Value Added Tax.

Because of trade policies, manufacturing in the US has moved toward the production of non-traded goods.Because we are still using traded goods but we are producing less traded good, there is an ever-increasing trade deficit.This is bad news for domestic manufacturing.Since the year 2000 there have been more than 3 million US jobs lost in the manufacturing industry.Increasingly more products are manufactured abroad and then shipped back to the United States for purchase and consumption.In order to straighten out this trade deficit, US trade policies need to change.

Trade policies include taxes on traded goods.A radical trade policy might tax all products made by US companies on foreign soil.This would not be a popular bill to be sure, but it illustrates ways in which the government might institute trade policies that will bring more of the high paying manufacturing jobs back to the United States.

Another way that trade policies can influence manufacturing is by subsidizing the products that are made domestically and sold foreignly.This would, in effect make it more expensive to buy US made products outside of the United States, passing on some of the manufacturing costs to foreign consumers.This sort of a subsidy program would be just one little step on a very long road that ends in balanced trade.

Trade agreements are constantly being negotiated.If you own or manage a manufacturing plant in the United States, you should stay involved in the trade policies as they are being shaped.Become politically active and lobby for the trade policies that will benefit your company as well as all domestic manufacturing.Learn about trade related laws.You might discover that as you learn more about the trade policies and laws, you also learn more about how to use the policies and laws to your advantage.

Finally, do your part to improve communications between policy makers and manufacturers.Sometimes it might seem like you are on separate teams entirely but generally you will be on the side of the public.Policy makers want the public to like the so that they can get re-elected.You want the public to like you so they will want to buy more of the product that you manufacture.If you can see that the makers of trade policy are really on your team (the team that tries to please the public) you will also see that the policy makers are one of your strongest allies in the quest for a strong manufacturing plant.