On Monday, following through on his campaign promise, newly-inaugurated President Trump signed an executive order that terminated US participation in the Trans-Pacific Partnership. The TPP was a free trade agreement between 12 signatory nations (not including China) in which the United States was the dominant player and which included countries accounting for more than 40 percent of the value of goods and services produced worldwide.
In the words of the prior administration, the objectives of the TPP were to "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in the signatories' countries; and promote transparency, good governance, and enhanced labor and environmental protections."
Four Asian signatories -- Japan, Malaysia, Singapore, and Vietnam -- joined in this partnership with the US and Canada. The goal: To establish a strong US presence in the region so that, in essence, the Asian signatories would not "be left alone on a dark street with China" and there would be collective bargaining power, among other benefits, including lowering tariffs and non-tariff barriers for imported goods among the signatory nations.
But reducing tariffs was not really the driving point of the TPP, since the economic benefit would have been minimal for the US -- it was about putting our country in the position of establishing trade rules in Asia and getting member states to comply with them, specifically as it related to intellectual property and patents of American corporations.
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Pulling out of the TPP will almost certainly have the opposite effect on China than what President Trump intends -- which presumably is to stem the flow of jobs and manufacturing and money to foreign nations.
Instead of punishing China, it now puts them firmly in the driver's seat in the Asia-Pacific region when it comes to trade.
Pulling out of the TPP is just the first step in what will likely be more aggressive steps by the Trump administration to make importation of foreign-made goods unattractive. Almost certainly, larger tariffs are going to be in store for China.
Trump wants iPhones made in the United States, not in Shenzen and Chengdu. At a fundamental level that's not a bad thing. We all want to increase skilled labor jobs in this country.
Unfortunately, while we might realize some domestic production of the kind of sophisticated manufactured goods that line the aisles of CES every year, it may have a negligible impact on the job market.
You see, the goods are likely to be made by robots.
While China has a lower cost of labor than the US, and has tremendous government subsidies in various industries, costs in that country for manufacturing are increasing substantially. Rising costs have prompted companies like Foxconn, the primary contract manufacturer of the iPhone, to deploy fully automated manufacturing methods.
As of December 2016, the Taipei-based manufacturer -- with major plants in Shenzen, in Guangdong province in southern China; Chengdu in Sichuan province in Western China; and Zhengzhou in Henan province in Northern China -- has deployed over 40,000 homegrown "Foxbots" and it intends to replace most of its human workforce with them.
Foxconn is considering opening a plant in the United States specifically to make displays, as it now owns Japanese electronics firm Sharp, following completion of a $3.5 billion acquisition in August of 2016.
At an estimated cost of $7 billion, the display manufacturing facility would employ as many as 50,000 people. On paper that is -- at least according to the company's CEO, Terry Gou.
Given the company's accelerated trend towards automation in China, I am under no illusion that Foxconn will not do the same thing in the US. That 30,000-50,000 job figure is almost certain to fall dramatically.
Perhaps the robotic factories that Foxconn wants to build will need skilled technicians to keep the coffee break-free automated workers running smoothly. But how many does each factory need? A few thousand at most, if that.
Certainly with the advancement of 3D printing and rapid prototyping, the most skilled people don't actually have to be based in the US, and there are a lot of economies of scale that come into play.
Where stuff is made will have no real bearing on where the jobs are.
But surely they need people to run the distribution and transportation side, right? Warehouses and domestic shipping?
Well, if what Amazon is doing is any indication, that's a no. The company already has mostly automated warehouses that use human beings primarily for the packing stages of the fulfillment process, as it purchased the Massachusetts-based robotics firm Kiva Systems in 2012 and now uses over 45,000 robots in its numerous warehouses across the country.
And of course, there are the drones that Amazon is experimenting with, which will one day drop small packages at your front door. But before that happens, we will probably see autonomous trucks drive goods from distributors, factories and port facilities to Amazon shipping centers, and from those shipping centers to parcel carriers in your neighborhood, where the last mile may be one of the few places that will continue to involve human beings.
Right now that's good old UPS, USPS and FedEx, which use flesh and blood. But that is likely to change, and Amazon and other large companies selling durable goods (like Wal-Mart) will probably cut out that part of the equation with their own intra-facility shipping services and local delivery soon enough. And if they can pull humans out of any part of that process, they will.
So yes, America will get manufacturing of durable goods to return to this country. And perhaps there are high-end, specialized products that can be made entirely by American firms. But in the not-so-distant future, the workers producing them and bringing them to your front door won't need lunch hours, health insurance, or 401Ks.