Value of Goods in the United States

As the holiday season approaches I am sure that many of you have seen the video’s on CNN about tainted toys from China. In some of those video’s CNN interviews random customers at toy stores and many of them say that they are now looking for a “Made in the USA” label. I think this is a valuable lesson for businesses in the United States who make products overseas. Just because that particular country has lax product safety laws the countries to which you are exporting probably don’t. This may be just the thing that brings a competitive advantage back to US companies.

What makes a company want to produce a product overseas anyway? Profits, plain and simple. Labor is cheaper, materials are cheaper, and you don’t have all those labor and product safety laws to abide by. The only downsides are shipping and customs, and as long as the profit margin that is gained by moving production overseas is substantial enough to counter these two downfalls outsourcing of production will continue.

The question now becomes how do we give an edge back to companies that are producing products in the US? We increase the downfalls with importing of certain products. By mandating certain safety standards for various products we can force overseas manufacturers to upgrade their materials to a similar quality level of those used in the US. Next we make those companies pay for product safety checks at US customs. In this manner we can legislate a number of small changes to our import laws that not only increase product safety for the US consumer but serve to close the cost gap between import and domestic products.

Naturally these laws would be more lax for products in serious demand such as oil or in the event of another deficit those products. By doing this we could keep prices low on product that we need to import and increase prices on those we choose to import. This may mean an increase in prices for the US consumer but it would also mean more US jobs so those same consumers could afford to pay more.

By legislating product quality requirement levels of imports closer to ours (but slightly lower) not only do we get the aforementioned benefits but the quality of American goods would still be higher building/maintaining a world wide reputation for quality thus increasing the implied value of American goods.