During the 20-plus years I've been authoring books and writing articles about Buying American, trade policy, and the effects of free trade and globalization on our economy, all too often I've written about the struggles of U.S. manufacturers. In my home state of Florida, I've seen many of our state's manufacturers go out of business and many Florida tomato farmers go bankrupt.
According to data from the Bureau of Labor Statistics (BLS), Florida has lost roughly 100,000 manufacturing jobs since 2000, and the U.S. has lost nearly 5 million jobs in manufacturing. Florida fruit and vegetable farmers have seen the domestic market for their produce flooded with imports from Mexico. Tomato imports have surged 400 percent and strawberry imports have shot up 600 percent since the North American Free Trade Agreement (NAFTA) was enacted.
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We hear time and time again that U.S. manufacturers and producers can compete with any country in the world and prevail because we are hard-working, dedicated, and possess the drive and ambition to win any competition. Although the products we make are highly competitive, it's often difficult to prevail against global rivals who undercut us on price for one reason or another.
Many concerned Americans claim we lose sales to countries like China due to cheap labor, lax regulations, or the fact that the Chinese government subsidizes its producers, many of which are state owned, to the tune of billions of dollars. There is certainly a valid case to be made for all these assertions.
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But another reason the U.S. has trouble competing with what may be called the "China price" that is often overlooked is that China artificially manipulates its currency to lower the cost of its exports, and it has been going on now for many years. The United States has not held China accountable for this practice of currency manipulation, which violates the rules China signed on to when it joined the World Trade Organization (WTO) in 2000. Our political leaders have discussed it and pondered legislation from time to time, but ultimately have done nothing about it for nearly 20 years.
And China isn't the only country to artificially undervalue its currency to make its exports cheaper than similar U.S. products. Allies like Germany, Japan, and South Korea also engage in currency manipulation to lower the values of their currencies.
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This practice also creates another problem. Foreign investors, flush with U.S. dollars by selling us their exports, use those dollars to buy U.S. securities and other financial assets, which causes the U.S. dollar to become overvalued. This form of "foreign investment" in U.S. assets with money that used to be ours before we sent it overseas to buy the exports of foreign producers has resulted in the undesirable side effect of driving up the value of the dollar. That makes products made in Florida and across the United States less attractive in terms of price to potential consumers compared to similar imported products.
Last year, the Coalition for a Prosperous America (CPA) issued a study showing the U.S. dollar was overvalued roughly 25 percent, causing American-made goods and services to be 25 percent more expensive than they should normally be when we try to sell them in foreign markets. At the same time, imports are 25 percent cheaper in the U.S. market. And it's all because of currency manipulation by other countries, allies and adversaries alike.
If Congress wants to do more than continue to kick the can down the road and instead do something to help manufacturers in Florida and across the country become more competitive, addressing the currency issue would be a good place to start. Fortunately, some members of Congress have begun to listen and are considering draft legislation that would require the Federal Reserve to impose a modest "market access" fee on foreign investment. This would lower the price of the dollar to a level that would make U.S exported products more competitive overseas.
When countries cheat and don't honor their commitments, there need to be consequences. We must act to hold other countries accountable for their actions in a way that benefits our small- and medium-sized businesses so they can keep and create jobs, increase profits, pay taxes, and contribute to a prosperous U.S. economy.
