Sure, we could manufacture electronic components and a whole host of other parts in the US, but at what cost. Free trade creates jobs by providing firms with cheaper goods so they can not only produce cheaper priced goods, but so they can have more money left over to create other jobs. Inflation kills jobs at every level. Economies of scale need global trade to work.
The entire modern global economy is built on this principle, and it's lifted more people out of poverty than any other concept in history.
So instead of paying a few cents a diode, manufacturers in the US pay 30 cents. Their goods now cost more, they now have less to invest in other technologies that create jobs, and the consumer now pays more and has left disposable income to stimulate other areas of the economy with those dollars. It's a downward spiral. The $500 Billion in goods we get from China is more important to our economy than the $100 Billion we ship to them.
And the worst part of all of it is that China has been preparing for this. They have a massive trade deal called One Belt One Road that circumvents trade with the US to establish Chinese trade with Africa and Europe without barriers. We're starting this with China at literally the exact worst time possible. They've invested billions in their new trade deals and sold it at all levels of their government as a way for them not to have to rely on the US anymore for trade. We've given them an excuse to put their deal to the test. The Chinese people and government are unified around One Belt, One Road as their path to global dominance this century. It's like we've challenged our neighbor to a drag race not knowing he's spent the last decade building a 12,000 hp dragster in his back shed. "Drag race? Sure, I'll drag race you, let me pull my Top Fuel Dragster out of the pole barn." China would rather things don't come to a head so soon, but they are more prepared for this than us. And do not underestimate the system of government in China, they have a President for life, there will be no political pressure for him to budge an inch.
But experts think that this is just posturing so far and that both sides will deal when the time comes, I hope they're right, because this Trade War could sink our economy quickly.
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