EXTREMES BEGET EXTREMES A Balanced Approach to Global Trade and the Role of Governments

2 Free Trade

3 “ Greater scope for market forces to determine the value of the Yuan would reduce an important distortion in the Chinese economy, namely the incentive for Chinese firms to focus on exporting rather than producing for the domestic market. ” Federal Reserve Chairman, Ben Bernanke, December Currency Manipulation

4 Nations undervalue their own currency to gain an unfair advantage in global trade. RESULT: Exports are cheap, and imports are expensive. They sell their goods, but don’t buy others’ goods. China undervalues its currency up to 40% in relation to the U.S. Dollar to make its goods cheaper. People buy Chinese goods because they are cheaper than the same goods made in America. If China ended its currency manipulation, the U.S. economy could grow by as much as $250 billion and 2.5 million new jobs!

5 How China Does It: 1.Purchasing American Treasury Bills This creates debt for America and floods our markets with cash, which when done over time helps maintain the undervalue of the yuan. 2.“Surrender Requirements” People with dollars in China are forced to turn them in for yuan to the Central Bank, which controls the exchange rate. 3. Government Control of Business Many corporations are owned or controlled by the government, which uses profits to buy more financial instruments to control the currency value. America’s trade deficit with China is increasing by about $1 Billion per day! Currency Manipulation

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7 U.S. Dollars per Chinese Yuan Exchange Rate ( ) Source: Pacific Exchange Rate Service

8 U.S. Dollars per Malaysian Ringgit Exchange Rate ( ) Source: Pacific Exchange Rate Service

9 U.S. Dollars per Thai Baht Exchange Rate ( ) Source: Pacific Exchange Rate Service

10 U.S. Dollars per Indonesian Rupiah Exchange Rate ( ) Source: Pacific Exchange Rate Service

11 U.S. Dollars per Japanese Yen Exchange Rate ( ) Source: Pacific Exchange Rate Service

12 U.S. Dollars per South Korean Won Exchange Rate ( ) Source: Pacific Exchange Rate Service

13 U.S. Dollars per Taiwanese Dollar Exchange Rate ( ) Source: Pacific Exchange Rate Service

14 U.S. Manufacturing Jobs (in thousands) Nearly 6 million manufacturing jobs have been lost since manufacturing last peaked in 1998 June Million Jobs September Million Jobs 14 Source: U.S. Bureau of Labor Statistics, Not Seasonally Adjusted

15 U.S. Manufacturing As a Percentage of Gross Domestic Product Source: US Department of Commerce, Bureau of Economic Analysis (BEA). Manufacturing Industry value added as a percentage of GDP (Apr. 9, 2008). 45%Drop

16 The State Crisis: Manufacturing Jobs Lost June 1998 to September 2010

17 Wal-Mart’ing of America Employment in Manufacturing vs. Retail Sectors Less Manufacturing Jobs now than any time since 1941! Average Manufacturing Job: $23.31 /hr Average Retail Job: $15.70 /hr Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Survey, Not Seasonally Adjusted; Average hourly Earnings of All Employees

18 World Exports As a Percentage of World Gross Domestic Product Source: International Monetary Fund, World Economic Outlook Database, Oct. 2010

19 Source: U.S. Census Bureau, U.S. Bureau of Labor Statistics Trade Deficit Manufacturing Jobs Manufacturing Jobs vs. Trade Deficit ( )

20 U.S. Trade Deficit ( ) Source: U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars U.S. Census Bureau China will Account for almost 40% of the U.S. Trade Deficit in 2010!

21 U.S. Trade Deficit Top Trading Partners U.S. Trade in Goods with World (Seasonally Adjusted) in Billions of Dollars, estimated through Dec. 2010; U.S. Census Bureau 423 % 368 % 94 % 359 % 255 %

22 Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index) Value of U.S. Dollar ( ) (as valued against currencies of major U.S. trading partners) Feb Sept. 2010

23 Trade Deficit vs. Value of U.S. Dollar ( ) Value of U.S. Dollar (Trade Weighted) Trade Deficit Source: U.S. Census Bureau, U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index)

24 Manufacturing Jobs Manufacturing Jobs vs. Value of U.S. Dollar ( ) Value of U.S. Dollar (Trade Weighted) Dollar Spikes - Jobs Vanish As industry declines, dollar follows dollar follows Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Labor Statistics

25 The Dollar Goes Up – Manufacturing Profits Go Down! Value of U.S. Dollar (Trade Weighted) Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Nati’ Income w/o Capital Consumption Adj. by Industry Manufacturing Profits (As Share of National Income)

26 Declining U.S. Industry Machinery Autos Textiles Lumber/Paper Chemicals Aerospace Metals

27 Endangered Manufacturing Industries 51% Source: U.S. Bureau of Labor Statistics, Current Employment Statistics Survey, Not Seasonally Adjusted 72% 78% 58% 70% 62%53% 64%

28 United States Steel Imports Source: U.S. Census Bureau

29 Chinese Steel Production ( ) Estimated 630 mmt in 2010 Total Production of Crude Steel – World Steel Association, Steel Statistical Yearbook 2010

30 Chinese vs. U.S. Steel Production in Millions of Metric Tons Total Production of Crude Steel – World Steel Association, Steel Statistical Yearbook 2010

31 U.S. - China Direct Investment (2000 – 2009) Source: The U.S. Bureau of Economic Analysis, Direct Investment, Direct Investment Position on a Historical-Cost Basis $49.4 Billion $791 million

32 The Dollar Goes Up – Manufacturing Investments Go Down! Value of U.S. Dollar (Trade Weighted) DomesticManufacturing Investment Domestic Manufacturing Investment (As Share of Investment in Private Fixed Assets) Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Investment in Private Fixed Assets by Industry

33 The Dollar Goes Up – Investments Go Overseas! DomesticManufacturing Investment Domestic Manufacturing Investment (As Share of Investment in Private Fixed Assets) Source: U.S. Federal Reserve, Nominal Broad Dollar Index (Trade Weighted Index), U.S. Bureau of Economic Analysis, Investment in Private Fixed Assets by Industry U.S. Direct Investment in China

34 Major Issues in International Trade Currency manipulation –China and other Asian countries keep the value of their currencies artificially low to make their exports cheaper and imports more expensive Subsidies –China has provided billions of dollars in subsidies, directly and indirectly, to its steel industry Attempts to weaken the trade laws –Multinational corporations that want to be able to rely on dumped and subsidized merchandise Climate change –Some solutions would encourage U.S. manufacturing to move to China and elsewhere, leading to greater greenhouse gas emissions

35 Trade Distortions: Do More. Determining the best path forward for America is not just the responsibility of the government and major corporations. The ultimate responsibility for the future of America lies with informed American voters. Your vote is your voice, and you have the right to be heard. Speak up for your jobs, your families, your country, and your future. Know More. Do More. Nucor.