The perilous plunges in some of the Asian stock markets, with Shanghai down 44 percent this year and Vietnam down over 60 percent from its highs, should have put the final nail in the coffin of the once fashionable theory of de-coupling, that Asian somehow would been immune from the global slowdown.

Asia's troubles are about to get a great deal worse, because Asia is becoming a victim of the rise in energy prices in an even more spectacular way than higher gasoline prices.

Consider, for example, why it is that China's steel exports to the United States are dropping at a rate of 20 percent this year. The answer is simple: shipping costs. China has to import the iron ore by sea from Brazil or Australia, make the stuff, and then ship it across the Pacific to the West Coast.

The shipping costs, which are adding a minimum $90 a ton to the final price, are making Chinese steel uncompetitive and pricing home-made U.S. steel back into the market. An intriguing new study by Jeff Rubin and Benjamin Tal of Canada's CIBC group puts this into the useful context of comparing the new transport costs with traditional tariffs against imports.

"Even back at a $100 per barrel oil price, transport costs outweigh the impact of tariffs for all of America's trading partners, including even its neighbors, Canada and Mexico," they note. "Back in 2000, when oil prices were $20 per barrel, transport costs were the equivalent of a 3 percent U.S. tariff rate. Currently, transport costs are equivalent to an average tariff rate of more than 9 percent. At $150 per barrel, the tariff-equivalent rate is 11 percent, going back to the average tariff rates of the 1970s."

Their calculations suggest that over the last three years, every extra dollar on the oil price has translated into a 1 percent rise in transport costs. To put it another way, every 10 percent extra mileage means a 4.5 percent increase in transport costs.

On a typical four-week sea voyage from China to North America, and including inland transport, it now costs around $8,000 to send a standard 40 foot container from Shanghai to the U.S. eastern seaboard. In 2000, it cost only $3,000 to ship the same container. If oil goes to $200 per barrel, it would cost $15,000 to send that container from China to New York.

This is good news not just for North American steelmakers but for all the other manufacturing industries that have been undercut by the low China price in recent years. It is very good news for Mexico, whose maquiladora factories along the border can start to compete again. It is good news for U.S. carmakers who may now expect a breathing space from the feared influx of cheap and fuel-efficient Chinese cars.

But it could be grim news for those American firms that shifted much of their manufacturing base over to China over the past decade, who now must scramble to see if that capacity can be quickly restored back at home. So many jobs and factories and skills have gone from America's industrial heartland over the past decade that this will be a real challenge.

The presidential candidates have latched onto this issue. Republican Sen. John McCain is proposing cuts in corporate tax rates and sweeping tax relief on investment in manufacturing plants. Democrat Sen. Barack Obama is proposing a "competitiveness agenda" based on investment in infrastructure and innovation and what he vaguely calls "fair" trade.

The United States still has the world's largest manufacturing economy, and, contrary to conventional wisdom, it has been growing steadily for the past decade, and so has productivity. According to figures from the U.S. Bureau of Economic Analysis, from 2001 to 2006 the dollar value of U.S. manufacturing output grew from $1.8 trillion to $2.4 trillion in durable goods and from $2.1 trillion to $2.5 trillion in non-durables.

Some of this is military-related. The value output of military vehicles and parts grew 238 percent from 200 to 2006, and ammunition grew 161 percent. But computer parts, irradiation and laboratory and electro-medical apparatus all grew more. What collapsed was textiles (falling 40 percent) and footwear (down 38 percent) and electric housewares and power tools (down close to 60 percent).

The problem is that while U.S. manufacturing has grown, and usually has done so in high-tech sectors, it has not been growing nearly as much as in China. And China now has the advantage of so many new manufacturing plants with the latest equipment (and has benefited from so much technological transfer) that the United States and Europe have a lot of catching up to do.

The opportunity is there. A real surge is about to come in the manufacture and sale and management of clean energy. Windmills and solar panels, "smart" meters for households and for grid management, nuclear power engineering, plug-in cars and advanced battery systems are all set to boom.

If American industry can take advantage of this opportunity that has been opened by the high oil prices and the sky-high transport costs they have brought, then those distressed mortgages in Ohio and Michigan and the banks that are stuck with them are going to look like good investments again.