Trump's withdrawal from UPU is another attack on American consumers

Editor's Note: Tom Fowdy is a UK-based political analyst. The article reflects the author's views, and not necessarily those of China Plus.

White House Press Secretary Sarah Sanders announced Wednesday that Donald Trump intends to withdraw the US from the Universal Post Union (UPU), a 192-nation treaty which regulates the fees international postal services must comply with.

United States President Donald Trump. [Photo: CGTN]

The agreement gives developing countries discounted shipping rates for small-packaged goods sent to first-world consumers, which, according to American politicians, creates huge costs for American companies in a cross-subsidy.

Washington's withdrawal is another escalation of Trump's war with China. By aiming to quit the treaty and impose postal subsidies on their own terms, the Trump administration aims to purposefully make it more expensive for small-packaged Chinese consumer goods to reach the US.

According to Bloomberg, American manufacturers praised the decision. However, being realistic, the president is continuing to sell voters yet another deception. 

The trade war will not make America better off. Built upon exaggerated hyperboles and mistruths concerning China's economic relationship with the US, Trump continues to defy the logic of economics for sleazy political gain. In the end, it is American consumers who will pay the price, out of their own pockets.

What Trump does not tell his voters honestly, is that globalization is an irreversible component of contemporary economics. 

Today's modern and interconnected world has made it unavoidable and advantageous for US companies to establish their supply chains abroad, seeking cheaper and more suitable conditions to make a profit in contrast to increasingly expensive American production, a byproduct of full economic development.

People shop in a Sears store in the Brooklyn borough of New York City on October 15, 2018. The iconic American retailer filed for Chapter 11 protection from creditors early on Monday. [Photo: VCG]

Because such a massive trade deficit has followed with this, Trump has repeatedly claimed that China has exploited the US by “stealing” its manufacturing. In reality, numerous American companies chose China because it was simply good for their business interests, as this is what globalization inevitably brings about.

When this is looked at in perspective, many Americans swallow Trump's highly simplified discourse without realizing the status quo has in fact been very beneficial to them, the consumer. Beijing's role in trade and production allowed millions of Americans to enjoy the luxury of inexpensive goods.

This created a deficit due to the differing positions of the two countries economies, yet it successfully kept inflation down and allowed stable economic growth. It is firmly taken for granted.

Understanding this, increasing numbers of tariffs and rising postal costs on China will not bring back US jobs but instead are bound to hit the consumer. Businesses will look for new ways to offset rising costs. This can only include shedding staff or increasing the costs of the products they are selling.

While the argument goes that they can buy “American made” goods instead and avoid the tariffs, they are not going to be cheaper. China's goods have been cheap because it is a developing country and with lower wages, has a bigger labor force and is able to mass produce goods to a worldwide market.

A job market in Huaian, Jiangsu Province, China. [Photo: VCG]

The US does not have any of those attributes to replicate it, meaning any attempt to offset tariffs with domestic manufacturing on the same scale as imports from China is a non-starter.

When a business is smaller and sells less – as would any American manufacturer, it is forced to charge more for its product to offset the higher costs of running it because sales do not break even as quickly. This will lead to inflation.

On the other hand, in the long-term companies may simply choose to relocate their supply chains to other developing countries, which will create the same dilemma all over again. If not China, then Vietnam, India, Sri Lanka, Indonesia and so forth will simply attain manufacturing dominance. Either way. Tariffs will not make America better off.

Given this, every sensible American should be questioning the merit of Trump's aggressive trade tactics in the run-up to the midterm elections. China does not rob the US, it makes it better off. 

As Trump moves to deliberately make Chinese postal fees more expensive, he is hurting consumers and everyday people. He is deliberately increasing the costs of everyday items. 

This move is bound to cause price rises in corporations that rely on small package posting through international channels, such as Amazon and eBay.

Average voters need to stop being so quick to believe their leader's hyperbole when they utilize the discourse of a “foreign adversary” for political ends. Voters need to see that Trump is no better than a con man who will not bring them back “lost prosperity.” 

Rather, he will cost them dearly. He might as well have just said: “We're going to start a trade war and you [the consumers] are going to pay for it!”