The trade deficit is only one part of the reason for outsourcing. In the Steve Jobs biography it says Steve Jobs told President Obama that there wasn't enough engineers in the U.S. for his company and regulation made it hard to set up factories here. This is still a problem here so if a trade war started day one of Romney's presidency he could change regulation but not the engineer count.
So there won't be a high level high tech and most importantly high pay manufacturing renaissance for at least 4 years and that's being very generous because the skills needed to be a good engineer takes a lot longer than 4 years to obtain. This means a change in regulation will make little difference.
If you build it they won't necessarily come.
Engineering is only part of mix of what is made in China and sold here. There has been a big push in manufacturing in China in everything from denim jeans to pad locks. Will a trade war lead to a pick up in U.S. manufacturing in those areas? Maybe, but only after our multinationals write down their investments in China, and after that they'll want to see what the effects of the trade war will look like here before investing here. Namely they'll want to know what the trade war will do to demand.
So, starting a trade war with China won't lead to improvement in U.S. manufacturing numbers right away.
On the other side A trade war would lead to job losses here in America right away. The biggest employer in the U.S. is Walmart, and they buy a huge amount of cheap goods from China. A trade war would kill their margins. The margin hammering would lead to job cuts before price raises as their whole business model is built on low prices. But as the trade war rages on price raises will come. This is stagflation personified. While people lose jobs prices rise. And this will play out again and again at U.S. multinationals which we have by far the most in the world. Japan has the next largest amount and we have 3 times as many as they do, and all will be effected one way or another by a trade war with China.
In China the war will be felt but instead of the people blaming their communist government they'll blame the U.S. and the government will stoke those flames for sure. The question then becomes who can take the pain better. Our consumer demand is weaning, so we need to export more. China's consumer demand is on a major upswing so they're looking to sell more of their goods at home. As it stands now with our better structured economy and experience we are poised to sell China more and more goods as time passes. To label them a currency manipulator now is to cut off our noses to spite our faces.
Walmart doesn't employ the most workers in America because it's the best place in the country to work. It's the largest employer because it employs the most low skilled workers. America is full of low skilled workers. It will be difficult to change this but even more difficult in the mists of a trade war.
Then you have to ask what will this trade war with China mean for our borrowing costs. The pain will be significant on the Chinese side, but will it be significant enough to push them to sell the trillion or so in US debt they now own? That's not clear since they keep their currency low by buying US debt and dollars. But it's a possibility and as we all should know it's not only what's actually happening that effects markets but also what might happen. The perception that China may sell US debt could effect our borrowing costs. We don't want to find out the answer to these questions right now and neither does China.
So, no, China doesn't want a trade war Governor Romney, but neither do we!
We should have thought about this before we encouraged our citizens to be couch potatoes. The same way our air waves are flooded with campaign ads they should be flooded with warnings that if we don't get more serious about school we are doomed. Instead of less public television funding we need more. We need movies on PBS that scare kids into going to school with vigor. They should show what awaits the country if we stay on the path we're on. We should get our best and brightest directors and actors to do them and we should flood the air waves with commercials for them.
We don't do this because an uneducated electorate is an advantage for scrupulous politicians. You can't say stupid shit like "I'll label China a currency manipulator on day 1 I'm in office" to an educated electorate.
No doubt our trade with China needs to be addressed but before that our dependence on debt from them and the rest of the world needs to be addressed. And before we can address that that our education system must be addressed, and before that our culture and they way we look at learning has to be addressed.
Because before we can borrow from home we need enough people here with money to lend. That will also go a long way towards needing to borrow so much in the first place. Further more and in conclusion, announcing you will attack your biggest adversary is like playing chess and announcing your moves before the game begins. It's not smart, and the last thing America needs right now are actions and leaders that are "not smart."