The Red Scare.

Tom Hopson runs the last American-owned TV factory: Five Rivers Electronic Innovations in Greeneville, Tennessee. All the others have been killed off or bought out by Japanese competitors, and now Hopson says his plant, too, is near extinction due to a new Asian rival, China. The threat became clear to him one day earlier this year, when he saw an Internet ad for one of his projection TVs right next to a Chinese-made model listed for $100 less. Later a customer--Five Rivers assembles TVs for brands like Philips and Samsung--threatened to stop using his company unless it matched Chinese prices. "We can't understand how they're cutting the price so low," says Hopson. In May, Five Rivers joined a petition asking Washington to slap tariffs of up to 84 percent on Chinese and Malaysian TV makers for allegedly dumping sets below cost. A ruling is due in October, and Hopson says he has to win, or his factory will be out of business by next summer.

This is not the first time American industry has raised the alarm about rivals from the East. In the late 1980s, the rise of another Asian economy scared America into believing it was doomed to be the world's second superpower--and fueled a cottage industry of best sellers and magazine covers about Japan's rising sun. Now most of America is focused on terror, but within manufacturing industries, managers and workers alike see China as far more scary than Japan (or its copycat, South Korea) ever was. They say the Chinese are cutting prices much more dramatically, and seizing U.S. market share more quickly--yet also far more quietly--across a broader array of industries than any other competitor has before.

The backlash is now in full steam, driven in recent months by explosive growth in the U.S. trade deficit with China, which totaled $44 billion for the first five months of 2003, up 27 percent from the previous year. Since May, companies and unions in businesses from bedroom furniture to luggage, textiles and machine tools have all appealed to Washington to step in and stop "unfair" Chinese competition. Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers, says calls about China from his 14,000 member companies have been doubling every month for the past year. "For our smaller member companies, China has become by far the No. 1 trade issue," says Vargo. "It's all they want to talk about."

However, bald protectionist tactics like tariffs and quotas run counter to the free-market fashion of the age. So the focus of U.S. protests has shifted to the state-controlled and artificially low price of the Chinese currency, the renminbi, which makes Chinese products far cheaper in the United States. This tactic has gained allies on Capitol Hill, where New York Sen. Charles Schumer and Illinois Rep. Don Manzullo are leading a push to get the Bush administration to demand the floating of the renminbi. Officially, the administration supports more flexibility in the exchange rate, but it is not lobbying Beijing with enough urgency to satisfy U.S. manufacturers.

They say time is running out. "There's not a day that goes by that [China] is not the centerpiece of conversation," says Edward Tashjian, vice president of marketing for Century Furniture, which plans to join the drive for protection. Trade barriers are --falling fast under the deal that brought China into the World Trade ...