You've heard of win-win situations? Well, meet the opposite. Okay, U.S. and European textile companies win in the short term, but its a pyrrhic victory. First, they don't have to become competitive now. Ed Deming said that if you don't have to change, you won't. (Take a look at the domestic steel industry, fellas.) Second, artificially inflating the prices on cheap goods has its own unforseen consequences. As the story notes,
Dozens of U.S. retailers, including J.C. Penney Co. and Liz Claiborne Inc., have filed suit to block the Bush administration from imposing textile limits, which would raise the price of imported clothing and other goods.They have two choices: Suck it up and raise prices, or find new suppliers. I just bought my son two new pairs of cheap, elastic-waist pants so that he can practice totally independent bathroom use (he's 14, and it's a real drag for his junior high teachers . . . just kidding -- he's three); the pants were made in Kuwait. Hey, as long as we're over there fixing Iraq's wagon, maybe we could RPG some tariffs over the border.
China's textile producers lose. The tariff makes them less competitive, but they don't see a yuan of it. And they're bound to lose volume in the process. There's always another place with cheap labor that hasn't yet bent over for the WTO. Maybe Afghanistan will soon start flooding our country with cheap sheets and hand towels. Martha Stewart, wearing fashionable stripes, will chuckle, and our trade representatives will sigh, "Why didn't we let them stick with opium?"