Where Policy Meets Pocketbook: MFN and You
Are American consumers about to see an end to cheap "Made in China" goods?
Whatever the official terms of the future trade relationship between Washington and Beijing, Chinese commerce has forged a solid friendship with many American consumers. That friendship has veered toward codependency.
Last year, the US imported more than $51 billion worth of Chinese consumer and industrial goods, up from $38 billion in 1994. Topping the list: toys, footwear, electrical goods, and all forms of apparel, from woven to knits.
The trade deficit with China, $5 billion in 1989, now looms at $40 billion.
The equation is simple: Businesses around the world cut their production costs by using low-cost Chinese labor, and consumers reap the benefits through cheaper goods.
But as the debate over most-favored-nation (MFN) status for China again heats up in Congress, consumers wonder whether 1997 could be the year they are denied access to low-priced Chinese products.
Human-rights watchers, aiming to boycott Chinese goods produced in prison labor camps, may walk past the Chinese-made Gap cotton shirt marked down from $34.00 to $16.99.
But average US consumers, looking for bargains across the board, could face some sticker-shock if MFN is denied. Again, the math is simple: With MFN, imports from China have an average tariff of 6 percent. Without MFN, they could sharply rise - to more than 40 percent on some items. Those costs are passed along to consumers.
In other words, no longer will that imitation bamboo rake or rubber plunger cost $4.99 down at the hardware store. The days when you could bank on a Sony Sports Walkman at the bargain price of $39.99, or a mid-sized Donald Duck stuffed toy for $20 at the Disney Store, would also be numbered.