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Rana Foroohar Is Very Confused

Here’s a letter sent several days ago to the Financial Times:


Attempting to justify Biden’s unjust tariffs, Rana Foroohar asks “what’s the point of trying to tally up the potential economic costs of tariffs … when no country, certainly not a rich one with decent environmental and labour standards, could compete on price with China in any area of production?” (“Not all American tariffs are created equal,” May 21).

Ms Foroohar is confused.

It’s true that the US share of global manufacturing output, at 16.6%, is second to China’s world-leading share of 28.4%. But because China’s workforce is 4.5 times larger than America’s, on a per-capita basis America remains the world’s leading manufacturer – a reality at odds with Ms Foroohar’s implication that rich countries “with decent environmental and labour standards” can’t “compete” with poorer countries that have lower standards.

Further, as the Cato Institute’s Colin Grabow reports, “manufacturing value added on a per‐​worker basis shows America to be the world leader at over $141,000. That’s 45 percent higher than second‐​place South Korea and over seven times that of workers in China. Such high productivity helps explain why manufacturing attracted over $55 billion in foreign direct investment last year [2022]—more than any other sector.” FDI in 2022 for Chinese manufacturing was, at $49.67 billion, nearly ten percent less than in the US. This fact is yet another that’s impossible to square with Ms Foroohar’s assertion that manufacturers in America are unable to compete against manufacturers in China.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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