China

The Geopolitical Risks of Trump's Protectionism

If China can't fight back economically, it'll fight back with guns.

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Trump-XiLiping
Kyodo/Newscom

President Donald Trump's punch-first-ask-questions-later trade policy yielded one of its first results today when South Korea acquiesced to a new trade pact with the United States. In exchange for being permanently exempted from Trump's stiff tariffs on aluminum and steel, this third largest exporter of steel to America agreed to limit its U.S. steel shipments to about 70 percent of their current levels. Seoul will also double the quota of American cars that can be sold in South Korea without meeting local safety and environmental standards, though that's largely a symbolic concession—American carmakers haven't been able to make full use of their existing quota, because South Koreans don't have a taste for big, badass cars. The deal will also streamline the onerous customs and regulatory procedures that American companies have to endure to do business in South Korea.

Except for the last item, what the Trump administration has pulled off here is an exercise in negotiated protectionism. If this is a blueprint for future deals, especially with China, the world may avoid an all-out trade war, but it will face far more geopolitical conflict.

The Trump administration forced South Korea to swallow such a huge reduction in steel exports despite the fact that virtually everyone on Capitol Hill was up in arms against using tariffs as a cudgel to negotiate with allies. Republicans pleaded with the president not to go there. Even Sen. Chuck Schumer (D–N.Y.), who rarely fails to drool when he sees a protectionist measure, lamented that the tariffs went too far because they were too broad and not limited to America's enemies. Ditto for Sen. Debbie Stabenow (D-Mich.), another known protectionist.

There was no comparable outrage when Trump threatened to slap $60 billion in tariffs on China, the world's second largest economy and America's largest trading partner after the European Union. Even free-trade Republicans were mostly mute. Democrats positively celebrated, with Schumer declaring that Trump deserved a "big pat on the back." Beijing's sole friend in the United States, it seems, was the stock market, which experienced its biggest one-week fall in more than two years.

The political reaction (or lack thereof) to Trump's anti-China policies is not surprising, because China-bashing has been a bipartisan sport for a while. Neoconservatives never wanted President Bill Clinton to normalize trade ties with the Middle Kingdom, but he did it anyway. Nonetheless, Hillary Clinton accused the Bush administration of eroding America's "economic sovereignty" and letting China become America's banker—an allusion to the fact that China owns a big chunk of U.S. debt. Barack Obama imposed tariffs on Chinese tires right off the bat, filed four complaints against Beijing with the World Trade Organization, initiated 24 anti-dumping cases, and—above all—prevented the World Trade Organization from classifying China as a "market economy," something that would have made it harder for the West to impose Trump-style tariffs on China.

Trump, of course, wants to take matters to a whole new orbit.

Some of his complaints against China are bogus, as when he worries that it runs a $350 billion trade deficit and manipulates its currency to encourage exports. Some are real but are none of the government's beeswax, such as the fact that China forces foreign companies to fork over trade secrets to do business there. Some are real and are the government's beeswax: China discriminates against foreign companies by creating all kinds of tariff and non-tariff barriers, disallows majority ownership of Chinese companies by foreigners, and severely restricts foreign presence in its financial, telecom, and other sectors.

No economist of any repute thinks that Trump is right to use the trade deficit as a scorecard to determine winners and losers. All the deficit signifies is that Americans buy more goods from China and have more money to do so. Furthermore, the dollars that China earns this way, it mostly ploughs back into the U.S. by buying American debt. This might enrage Hillary, but it keeps interest rates low for Americans, making their McMansions more affordable. Meanwhile, far from artificially lowering the price of the yuan, China has been trying to ramp it up for about 10 years to curb capital flight. As for China grabbing trade secrets: If American companies are willing to do business in China despite such demands, that's their problem. Europe forces American pharmaceutical companies to sell drugs at severely discounted rates, but not even Trump is suggesting that Uncle Sam needs to take retaliatory action against that.

One consequence of America's big trade deficit with China is that it adds to America's massive monopsony power (the power from being a dominant buyer) to dictate the terms of trade. As George Mason University's Tyler Cowen points out, if America were to stop buying Chinese toys, China couldn't simply reroute the toys and sell them to Indonesia at the same price. So it would have to swallow massive losses. Yet it does not have very many American products to hit back against. Its options are severely limited, which is why it has responded to Trump's threat of $60 billion tariffs with just $3 billion worth of retaliation, leaving completely untouched America's main exports, such as soybeans and Boeing airplanes.

If the Trump administration were to use this power to pry China's markets open further, that would be one thing because it would integrate the two economies even more, which would temper each one's appetite for conflict. But Trump has deeply protectionist instincts. He has been excoriating America's trade deficits since he was on his first wife. In his otherwise capricious mind, that may be the only fixed point.

Getting China to lower some of its tariffs and other barriers on foreign products might diminish the trade deficit a little, but the Chinese simply can't afford America's high-priced goods and services enough to make a significant dent in the deficit. So the odds are that Trump will try to do with China what he did with South Korea and force it to scale back its exports—particularly since, as he sees it, that'll boost domestic manufacturing and bring back "American" jobs.

China, which has its own ideas about its "manifest destiny" and has been smarting over being history's loser for so long, has a nationalism problem of its own. Its rulers, contra Trump, have made a very great effort to keep such populist sentiments in check, in part by keeping growth and development on track. And trade with the West in general and the United States in particular has been an integral part of that. In 1990, before America gave China Most Favored Nation status and supported its bid to the World Trade Organization, bilateral trade between the two countries was a mere $17.6 billion and cross-border investment was trivial. Now bilateral trade touches $600 billion annually and cross-border investments have soared to $90 billion. This dependence on world trade prevented China from too aggressively pursuing its geopolitical ambitions in its and America's sphere of contact.

Trying to reverse or freeze these gains in wealth and status will undo that. Beijing might not be able to respond to Trump's economic bullying in kind without hurting the average Chinese. But it could retaliate on other fronts—for example, by re-igniting its ambition to annex Taiwan, accelerating the militarization of the South China Sea, encouraging North Korea's nuclear ambitions, and expanding its influence in Asia as a counterbalance to America.

That last item might not bother those of us who don't see a unipolar world as an entirely healthy state of affairs. But it will especially trigger Trump and the incoming hawks on his national security team, such as Secretary of State nominee John Pompeo and future National Security Adviser John Bolton.

Regardless of whether Trump's anti-trade zealotry triggers a trade war as devastating as the one in the wake of the 1929 Smoot-Hawley tariffs, it will raise the risk of geopolitical instability, the poisonous fruit of protectionism.

NEXT: Mitt Romney Reminds Us That Trump Isn't as Extreme on Immigration as the 2012 GOP

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  1. If it comes to war, the PRC doesn’t have a Chinaman’s chance!

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  2. I hate to say it but this article actually makes me support Trump. Because first of all, if China is demanding trade secrets then that’s wrong, and secondly if they use that as a pretext for war, then BRING IT ON, slants.

    1. Hey man, cool it with the sinophobia.

    2. Re: Dajjal,

      Because first of all, if China is demanding trade secrets then that’s wrong

      You can file that under “It’s Not Your Gawd-Damned Problem”.

      1. You can file your response to this as

        “It will be your goddamn problem when they become world hegemon, make the rules for the globe, and spawn puppet totalitarian shitholes across the globe.”

        Have fun with that future.

      2. I can’t speak to this broadly, but I worked at a company that was export-restricted due to our equipment being useful in building nuclear weapons and guidance systems, and this was a problem for us.

        We couldn’t ship to the PRC, but competitors in the UK and other countries could and had to disclose IP.

        So we were excluded from the benefits, but still exposed to the long-term competitive threat of a state actor aggregating trade secrets from multiple competitors in a way that a 60-person company like ours would have trouble matching. (Our performance lead was wide enough to protect us from anything short of that.)

        To say that our private sector competitors signed up for that ‘willingly’ (as Dalmia did) isn’t accurate. These contracts start with some variation of the following: ‘Share your IP, or we’ll have our R&D department reverse engineer your stuff and undersell you.’ That’s imposing enough when it comes IBM, Seagate or Philips; it’s really imposing when it comes from a large nation.

        Academic economists think that only Rust Belt dinosaurs are exposed, but we were the world performance leader in a specialty that the IC, optics and disk drive industries depend on. (You couldn’t make the lens in an iPhone or the hard disk serving up this web page without tools invented by our R&D team. Ditto for SNP chips and high resolution mapping satellites.)

        Kiss that goodbye, and you can kiss >2% growth goodbye along with it.

        1. Yup. The game China has been playing has been a very cut throat one. The problem is that the USA, Europe, Japan etc were all too cowardly to tell them to go fuck themselves. We should have NEVER opened up full trade with China until they met certain basic criteria for being a somewhat free market. Demanding IP, demanding majority control by Chinese businesses of all ventures in the country, and their massive tariffs on imports are all reasons that individually should have left them shut out. Combined there is NO way we should have signed off. We could have built up India, a nice, friendly, pro western country instead as the cheap labor capitol of the world.

          It was shear madness, but now we’re so hooked out on cheap Chinese crack it will be hard to fix the problem. If we’d just fixed it up front it would have been better for all.

  3. South Koreans don’t have a taste for big, badass cars.

    So, you’re saying that we should just end all trade with them.

    1. How did you get that ? Nope. It just further illustrates the idiocy of this whole structured, negotiated trade/protectionist racket. Trump, like many others here, thinks he knows whats best as opposed to willing buyers and sellers.

      I mean, just read the SK deal. Its central planning right out of the Hugo Chavez playbook.

      1. I can’t view any nation that hates big, badass cars as a worthy trade partner.

        1. Yep, fair point. Its morally suspect at some level.

      2. Trump, like many others here, thinks he knows whats best as opposed to willing buyers and sellers.

        And there is the rub. South Koreans are not willing.

        1. God knows what you mean by that, but in any case my concern is not what goofy policies other countries adopt, be it tariffs, or whatever. My concern is Americans being able to make these economic decisions without busybodies like you sticking your nose in it.

          If you read the SK deal details above and didn’t burst out laughing at the ludicrous stupidity of it, well, don’t go around telling anyone you believe in market economics, let alone free trade.

    2. Shikha doesn’t have a ducking clue about the kinds of cars America makes. Most of which are not full size sedans. The current rate rend is for smaller sedans, CUV’s and crossovers. The same shit the Koreans make. You’re going t see a lot of big sedans in ASIa though, as China DOES have a huge appetite for them. So much so that it’s demand single handedly kept Buick off the chopping block during Obama’s illegal takeover of GM.

      The automotive status symbol in China is a large, lomg wheelbased sedan with a lots of rear legroom, with some me kind of chauffeur or staff driver.

  4. Some are real but are none of the government’s beeswax, such as the fact that China forces foreign companies to fork over trade secrets to do business there.

    Forcing companies to allow China to steal their information is none of the government’s beeswax?

    Really?

    Okay. Good to know.

    1. Forcing companies to allow China to steal their information is none of the government’s beeswax?

      The US government isn’t forcing companies to do business in China, so yeah, it’s none of the government’s business on what conditions companies are willing to agree to.

      1. If a foreign government holds American visitors for ransom back to their families, that’s none of the US government’s business because those people went of their own volition, and if their families paid, that was a condition they were willing to agree to.

        1. So you view an enterprise entering into a deal that you consider disadvantageous as equivalent to kidnapping and ransom?

          1. If you move company assets to a country, and they prevent you from taking said assets out of country, and follow up with demands or they won’t let you operate your business, yes, they are holding your stuff ransom. It’s not kidnapping, but the principle is the same.

            Unless you think that companies are people. Then it is literally kidnapping and ransom…

            1. Indeed, and China is legendary for this.

              1. Indeed. It’s almost as if I didn’t build up a strawman, and my argument was actually relevant to the discussion.

      2. I’m not sure it’s quite that simple.

      3. You guys are living under a fucking rock. Tell me how great the world will be when China lords over it as the Middle Kingdom and requests tribute from all their lesser neighbors, sets the rules for intentional diplomacy and conduct. Have fun with a mafia totalitarian kleptocracy in charge of the world.

    2. Re: damikesc,

      Forcing companies to allow China to steal their information is none of the government’s beeswax?

      “China” doesn’t force anyone to do business in China nor steal anything. Whatever business companies deside to do inside China is absolutely not your gawddamned business nor the government’s.

      1. Given China’s own protectionist practices, and government sponsirship of IP theft, yes it is.

  5. Reason Magazine in 2018:

    If we don’t accept Chinese vassalage they’ll declare war. So we better do what they say.

    1. Amazing approach to trade and foreign policy, isn’t it?

    2. Didn’t she also argue that the travel ban would make Muslims commit terrorist acts against us?

      1. That rings a bell. Probably. It’s Dalmia. She hates the US, and wants us to be laid low. I’d bet it’s part of her Indian heritage and wanting to get even with the Anglosphere for trying to bring India out of the backwards shithole it is during British colonial rule. The British Empire collapsed, and we’re their inheritors, so she hates on us in their place.

        1. She really is vile. Not a libertarian thing about her. Just a thinly veiled progtard.

    3. Ah yes, unless we punish our own citizens for wanting to buy Chinese stuff we’re doomed I tell you doomed !

      I have my problems with Reason of late, but not on this topic. Supporting Free Trade is not equivalent to being a vassal in any sense.

      Its not a stance they’ve changed on over time, because its been one of those core things libertarians seemed to agree on back in the day.

      1. No, supporting free trade is not equivalent to vassalage.

        Saying “We must let the Chinese dictate our trade policies so they don’t war on us” is vassalage. You’re letting another nation determine your policies on the international stage.

        This shouldn’t be hard to grasp. But I guess “Free minds” aren’t equivalent with intelligent ones.

        1. Ah yes, Ye Olde Reason Message Board Snark.

          Adopting Free Trade, regardless of what the Chinese do isn’t letting another nation determine our trade policies. Its freeing American’s to make their own economic decisions.

          In fact, it is you who are letting another country drive our policies. You see the Chinese put a tariff on something (a tax on their own citizens) and your immediate instinct is to respond with a tariff – a tax on US citizens. Your response is reactionary, economically illiterate, and destructive to economic liberty. I am guessing its emotionally satisfying at some level though, given how many seem to be deeply wedded to it.

          1. How about their massive ongoing IP theft? Trump is trying to eat this shit under control. Letting China do what it wants with no retaliation won’t do that.

            1. Hmm…so the Chinese steal stuff and we…make our own citizens pay more ?

              Sounds legit.

              /s

              1. How else do you propose we leverage them into behaving better? Military escalation?

                1. Why would we think tariffs would make them behave better ? Particularly concerning military technology, I quite doubt it. That new stealth fighter looks awfully…familiar. Its probably best to assume they are unreformable thieves, and go from there. I guess I am puzzled why so many here have such deep seated distrust/fear/hatred of China, but think some tariffs ill fundamentally change them.

          2. @Iheartskeet, let me ask you something: If a majority of American consumers (or a subgroup of same controlling the majority of US consumer spending) prefer products made in a prison-state over competing products made under relative economic freedom due to the lower cost of the former*, what would you consider an appropriate, non-reactionary, economically literate, and constructive libertarian response?

            I’ve always thought that bodily rights are as important as property rights, and I’m assuming that you aren’t advocating unfettered trade in property stolen at gunpoint (by Somali pirates, or…); so why accept goods produced by workers held at gunpoint?

            *You could argue that something other than cost is motivating those choices, but even assuming that for the sake of argument wouldn’t make the transaction between the employee and employer consensual or peaceful. If someone is doing ‘better work’ because they’ll be denied travel visas and sent back to a ringworm-ridden collective farm if they don’t, it’s not a consensual exchange.

          3. Just to put the above in context:

            We’re talking about a country in which owning BB guns could get a person executed until a couple of years ago, and in which it still does get them life in prison without parole.

            We’re talking about a country that not only tracks the most trivial disobedience of every citizen, but is going so far as to institute a ‘social credit rating’ system to punish people who return rentals late, watch porn or drink too much, and gloats that this will make it “hard for the discredited to take a single step.”

            Seriously, that’s bordering on North Korea level social control.

            1. KH, the response is: let said Americans make their own decisions on what to buy. If you want to mount a campaign to shame Americans into voluntarily not buying Chinese, knock yourself out. Its been done before. I disagree with you forcing it on me.

              Let me ask you: what country is good enough to trade with us ?

              I ask this because I am pretty sure I already know the answer. Anti-Free Traders (or “Fair Traders”) have a rather predictable set of arguments. If its not China’s human rights issues, then its Taiwan’s low wages, or French subsidies, or Japan’s protectionism. In the end, its always something thats not fair that we need tariffs for ad infinitum. At the core is a belief that trade deficits are bad and that any country other than us making stuff is bad. So, my guess is even if we banned Chinese imports, you wouldn’t be happy, and it would be something else.

              Therefore, I suspect your moral preening is a bit, uh, lets say “situational”. It certainly isn’t an argument Trump is making.

              Advise if I’ve got you wrong.

              Meanwhile, these tariffs on balance cost us jobs, productivity and money…all to protect a sacred few politically connected jobs. How come Americans are last on your list of people to worry about ? They are first on mine.

              Lastly, what EXACT policy are you suggesting ? If the human rights violations are so bad, is anything short of a complete embargo immoral ?

              1. So if the US government confiscates an American citizen’s home and business under eminent domain and gives the land to an exporter, you’d want everyone else to treat that exporter (and the state) as normal, legitimate trading partners?

                >> KH, the response is: let said Americans make their own decisions on what to buy.

                Americans can’t even do that domestically. If my bar-certified lawyer botches a major contract, I can’t shop around for a non-union lawyer to replace him. If my AMA-certified doctor can’t handle a mildly complicated case (a real and recent example), I can’t go to the non-union clinic down the street and get better care for less.

                >> Meanwhile, these tariffs on balance cost us jobs, productivity and money
                >> …all to protect a sacred few politically connected jobs.

                It’s the other way around. US manufacturers have almost no protection from international competition. On the other hand, schoolteachers, doctors, nurses, lawyers, dentists, dental hygienists and CPAs all have guilds with state-granted monopoly status.

                I suspect that you’d meet a lot less resistance from workers in non-darling industries if you offered a serious plan to wind down white collar unions.

                1. I have no idea what the f*** you are talking about with the eminent domain example, as nothing I’ve posted or argued would support confiscation of any Americans property. Indeed, I’m arguing against you confiscating American economic liberty….indeed confiscating it for the politically connected.

                  On the second bit, you’ll get no argument from me as far as de-regulating any and all professions and doing away with licensing laws.

                  Your larger argument here, that since we have any regulation, that therefore I must accept all further regulation and interference in the economy as valid, is a trope I’ve seen before on these boards about a million times now. Its childish and lacks any sense of proportion. Where does all this lead ? I mean, are you for capitalism or not ? I’d add its a bit rich arguing for tariffs, the very epitome of cronyism, while spinning it as some kind of pro-everyman stance. Thats some chutzpah brother.

                  I’m not so sure workers in affected industries would be all gung-ho for this de-regulation though, as I suspect a fair number have spouses or relatives that are teachers, nurses, etc. I’d add too that these professions are location-dependent personal services. That protects them from foreign competition more than regulated entry. Again, a sense of proportion.

                  1. Lastly, you didn’t answer my last question. Given your moral preening on China, is anything short of a complete embargo immoral ? If you are so concerned about Chinese citizens, it doesn’t feel like a steel tariff quite meets your moral standards.

                    Also, I guess I had you right on the other stuff.

                    1. Since you brought it up, I’m willing to bet that my free trade credentials trump yours by a wide margin. Aside from an office job that I quit after a month, I’ve never worked in a position that wasn’t wide open to international competition – not just the hypothetical kind, but established foreign competitors with deep market penetration that had already eaten our domestic competitors. We had to be better than them every single day to stay in business.

                      I volunteered in my early 20s to get a pro-market mayor elected in one of the bluest cities in the US. One of the many positive results of that is that we headed off calls for a city-run WiFi system and instead have privately-delivered WiFi and residential fiber that’s among the cheapest and fastest in the nation. (I’m posting this over a 250 Mbps fiber line that costs $55/Mo. Another $15/Mo. would get me 1 Gbps.) We also reigned in our thuggish police union somewhat and consistently balanced the city’s budget.

                  2. Then you’re dense. I asked you why I should treat labor taken at gunpoint differently from property taken at gunpoint, which you never answered.

                    You won’t find a libertarian case for doing so, and had you acknowledged that, it would have answered your questions for you (with less grousing and profanity).

                    If coercion is coercion, and a person has as much ownership of their time and body as they do of their stereo system, then the PRC could be sued for compensation in every part of the world. They’d lose most of those cases in summary judgment (unless they let courts interview witnesses in reasonable safety, in which case they’d lose on the facts).

                    Tariffs are a poor alternative, and Trump’s specific ones are even worse, but your claim that any tariff whatsoever unjustly curtails your economic liberty is bull. You have no libertarian economic right to buy my stuff without my consent from the person who stole it from me. Period. Ditto for any person’s labor.

                    To dodge that, you attacked a straw man composed of your stereotypes of opponents.

                    Then you asked me to respond to a false choice between absolute free trade with every prison-state on Earth and no cross-border trade whatsoever – when nobody in national politics has even hinted at the latter or has the political backing to even inch toward it.

                    To top it off, you tried to tie me to your straw man, and when I didn’t slap you down for that, you took it as an invitation to up the ante.

                    1. (The previous two should have posted in reverse order.)

                      Given your posts, I’ll bet that you work in a protected job.

                      The way that you, Krugman and Dalmia write shows complete ignorance about modern production. The three of you are using foreign slave labor as a point of leverage to prevent manufacturing unions from making a comeback, but the businesses you’re hitting hardest have almost no potential to form traditional blue collar unions. They’re privately-held, high-skill operations that compete every day on the global market at a regulatory disadvantage and win. They’re some of the strongest domestic success stories of the last three decades, but most armchair economists on the left and right have spent those years shorting them.

                      You’ve said that you support professional deregulation, only to hedge that by claiming that it won’t be politically doable. As a former political organizer, I can tell you that’s not true. Party bureaucrats on both sides will hate it, but the raw votes are there and the first steps can even happen on the state level.

                      The reason voters rejected your offer of piecemeal free trade is that they rsee how insincere you are. You’re waging a Chavez-like war on political enemies who were beaten decades ago and using that as cover to short successful businesses (probably because you’re afraid that they’ll beat you in the Positional Economy, which would show just how little you care about Comparative Advantage).

                    2. Well, these three posts are a garbled mess.

                      First, if “stolen property”, IP or otherwise, is being imported, it would fall under the same legal remedies as if a domestic firm stole it. I don’t know why you’d think I am pro-stolen property. As far as the PRC stealing people’s labor, if I consult the Global Slavery Index, it tells me 0.247% of China’s workers are slaves…compared to 1.4% of India’s and 0.018% in the US. What exactly is your cutoff ? Zero ? 1% ? Should we embargo any and all counties above your cutoff ? How come no outrage about India ?

                      Second, goody for you on your job history. I have no reason to doubt you, other than this is an anonymous message board. You are 100% incorrect that I work in a protected industry, but my personal status has nothing to do with it. Its an ad hominem, not an argument.

                      Lastly, on the rest of this mess, I’ll just collapse it into this:

                      Is this guy a traitor ? Is he waging a Chavez-like war ? Is he arguing for piecemeal Free Trade ?
                      https://en.wikipedia.org/wiki/Milton_Friedman

                      He’s not Paul Krugman. He arguably has done more to popularize personal liberty and economic freedom than than any one individual recently.

                      I’d say if you think he is a traitor or has some ulterior personal motive, then you’ve gone around the bend to la-la land.

                    3. >> Well, these three posts are a garbled mess.

                      If so, only because it’s in response to your garbled logic.

                      >> I don’t know why you’d think I am pro-stolen property.

                      Because you think that you have a right to pay below-market rates for the labor of people who have no economic freedom in their own country and can’t leave:

                      en.wikipedia.org/wiki/Freedom_of_movement

                      Worse, you’re negotiating those rates with a communist dictatorship and its favored tycoons. (That’s rich given that you’ve spent this thread complaining about “politically connected” industries in the US that receive nothing close to that level of favoritism.)

                      And if you want to dispute whether those prices are artificially low, go ahead. You’ll lose.

                    4. >> if I consult the Global Slavery Index, it tells me 0.247% of China’s
                      >> workers are slaves…compared to 1.4% of India’s and 0.018% in the US.

                      We already discussed the PRC’s domestic human rights record. You’ve just cited an estimate by an organization that doesn’t have access to workers in the PRC and has been panned for sloppiness:

                      en.wikipedia.org/wiki/Global_Slavery_Index

                      “The index is based on mix of sources: population surveys in a few countries; fuzzy estimates by governmental agencies or NGOs; stories in the media; and local experts. For nations lacking any such source, the index creators engage in an ‘extrapolation’ exercise — they simply apply an estimate from one nation to ‘similar’ nations lacking such estimates.”

                      “[T]he basic unit of measurement of ‘modern slavery’ is flawed: the definition is self-created and, bizarrely, changes from one year to the next.”

                    5. Well, you (not me) are making the claim that China is essentially a slave state…but haven’t provided anything other than anecdotes. If you have something better than the GSI, by all means lets see it. Its funny you critique the GSI…but apparently your own observations and anecdotes are just fine.

                      I’ll note the critique of the GSI hints at what may be all but insurmountable…defining clearly what “slavery” is. Its as tough to define as “trafficking”, and indeed the critique is from an author specializing in trafficking…itself a topic beleaguered by exaggerated statistics (though I don’t know if hers are).

                      Similarly you provide a link to a Freedom of Movement writeup, that doesn’t prove your case. Indeed, the article indicates the restrictions are driven partly (mostly ?) by China’s subsidization of housing an services. Its not unlike, say, an argument for a border wall based on the incompatibility of open immigration with the US welfare state. Thats not to say that I don’t think China’s policy is appalling.

                    6. And that brings us to the point. At what stage does our government allow imports based on the “fairness” or freedom of our trading partners ? You sure as shit don’t know what “below market” is…do we now have a federal agency enforcing some kind of global prevailing wage test ? Who defines “free” and “fair” ? Something foreigners might view as a huge improvement versus working in a rice paddy, you probably regard as degrading. Why do you get to decide for all of us ? My view this is a fool’s errand ripe for cronyism and selective outrage. Other than clear cases where national defense is at stake, my view is its up to Americans to decide for themselves.

                      Lastly, you’ve critiqued my questions to you as strawmen, but they aren’t. I’m sincerely asking, what’s you’re idea ? Your rhetoric and your solution (steel tariffs apparently ?) don’t seem to match. I point this out because I believe if we took your logic to its end, it would result in policies even more harmful to Americas.

                    7. You complain about what you perceive as a lack of evidence, but you’ve made multiple hyperbolic claims that you haven’t backed up with anything at all:

                      – That the industries that might gain from them amount to “a sacred few politically connected jobs”

                      – That “these tariffs on balance [will] cost us jobs, productivity and money”

                      – That “Anti-Free Traders” won’t ever be satisfied

                      Your first claim is false and obnoxious. The US industries most impacted by Chinese competition have almost no friends in Congress. I spent years working at a maker of high-end custom instrumentation, and I can guarantee you that nobody on Capitol Hill had the slightest idea that our industry even existed (despite the fact that we were an irreplaceable supplier to the semiconductor, optics and data storage industries). We were routinely the target of harassing federal and state regulations, while at the same time ‘cool’ companies like Apple got presidential bailouts when they infringed on foreign IP (https://cnn.it/2q39kXF).

                      As for #2, you’ve provided zero evidence that this round of tariffs will cost jobs or anything else.

                      On #3, this isn’t 1970. There’s no political will for broad tariffs.

                    8. >> You’ve critiqued my questions to you as strawmen, but they aren’t.

                      Yes they are. Here’s what you wrote:

                      “I already know the answer. Anti-Free Traders (or “Fair Traders”) have a rather predictable set of arguments. If its not China’s human rights issues, then its Taiwan’s low wages, or French subsidies, or Japan’s protectionism.”

                      That’s an unconcealed and *literal* straw man: en.wikipedia.org/wiki/Straw_man

                      You’ve also repeatedly brought up hysterical ‘slippery slope’ scenarios that have no relevance to the current political climate or the relatively modest tariffs being debated.

                      >> My view this is a fool’s errand ripe for cronyism and selective outrage.

                      Perhaps, but the current system is equally abusable. Companies with access in D.C. get protection (like Obama’s legal bailout of Apple above), which is a carrot that the fed can use to control the private sector and extract campaign donations. (Congressman: ‘Give me some sugar or I’ll help your competitors.’)

                    9. Nope.

                      First, the “sacred few politically connected jobs” comment is well supported by a ton of evidence. Like 200 years of economic thought and research. Any variety of articles at Reason discuss it. A good book is James Bovard’s “Fair Trade Fraud”, which covers tariffs in excruciating detail. Ditto for these costing us jobs, productivity and money.

                      You individual job experience just offers proof that some industries are better connected than others. Shocking ! Your complaints about regulation aren’t an argument against free trade, indeed I’m all for a lot less regulation. Dude, I’m AGAINST cool companies getting any special deals ! You want to expand it !

                      On the strawman stuff, again, I made a guess at your beliefs, then I politely ask if I made an accurate guess (you left that part out). You haven’t commented whether my guess was wrong. You could easily say “nope, wrong on that stuff”, and I’d be fine. A strawman argument asserts that you DO believe in those things. You seem awfully butthurt about some something you could have just said “nope” on.

                      I’ll also note that you are a liar. You changed my quoted wording from “I ask this because I am pretty sure I already know the answer” to asserting I DO know your beliefs. Again, I’m asking. You haven’t answered. Thats on top of ad hominem attacks on what you to believe my motives.

                    10. On the slippery slop stuff, I mean for the love of god, this is all in the context of a potential global trade war. I sure hope it doesn’t go that far, but to believe such a scenario isn’t relevant or of minimal risk is fairy-tale thinking. Which seems to be your specialty.

                      On your last bit, again, I argue for reducing the potential for abuse. Earlier, you complains about lack of evidence for cronyism, then you give examples and complain about…cronyism. I think you’ re going to have to face the fact that your statements are a tangled mess of illogical and bad faith arguments.

  6. Regardless of whether Trump’s anti-trade zealotry triggers a trade war as devastating as the one in the wake of the 1929 Smoot-Hawley tariffs

    But will we get an act with as funny of a name as Smoot-Hawley? Scientists currently predict, no.

  7. I’m with reason most of the time against the trolls and john, but fear-mongering? What the hell.

    1. It’s Shikha. Even when I might agree on her core stance, her argumentation is often poor.

    2. I think you’re reading too much into the subtitle “fight back with guns”. I had the same initial reaction but she means China may cause trouble in NK, Taiwan, South China Sea, and greater SE Asia.

  8. Shikha always takes a rational and good point and decides to go off the rails with it into crazy land.

    1. We bashed her so good on immigration, she is trying a new beat: Geopolitical economics.

      1. How does someone bash a sock puppet?

      2. This is a libertarian site. Only a half-educated goober would expect authoritarian, bigoted immigration policies to be welcome here.

        Carry on, clingers.

        1. And yet here we are, constantly having to deal with immigration articles that are hyper focused on race (bigoted) and endlessly demanding that the population of the US be stripped of their right to determine immigration policy for their own nation (authoritarian)

  9. Perhaps arguing the economic deficiencies of the policy is a better idea.

    1. That’s not how Shikha rolls.

  10. ” But it could retaliate on other fronts?for example, by re-igniting its ambition to annex Taiwan, accelerating the militarization of the South China Sea, encouraging North Korea’s nuclear ambitions, and expanding its influence in Asia as a counterbalance to America.”

    My favourite front is the Mexican front, with all those rapists and bad hombres.

    “Mexico also happens to be the one spot in Latin America where the United States would respond with alarm to a heavy Chinese presence.

    That sort of alarm is just the thing some Mexicans would now like to provoke. What Mexican analysts have called the “China card”?a threat to align with America’s greatest competitor?is an extreme retaliatory option. Former Mexican Foreign Minister Jorge Casta?eda told me he considers it an implausible expression of “machismo.” Unfortunately, Trump has elevated machismo to foreign-policy doctrine, making it far more likely that other countries will embrace the same ethos in response. And while a tighter Chinese?Mexican relationship would fly in the face of recent economic history, Trump may have already set it in motion.”

    (From a frightened bourgeois American publication.)

    1. My favourite front is the Mexican front, with all those rapists and bad hombres.

      “Mexico also happens to be the one spot in Latin America where the United States would respond with alarm to a heavy Chinese presence.

      …because it is Mexico’s interests for us to REALLY not give a shit what they think or want.

      Hell, let’s just tax remittances 100%. It’s only the largest source of income the fucking country has right now.

      This isn’t really a fight they can win.

      1. “Hell, let’s just tax remittances 100%.”

        That’s the Libertarian solution? It won’t hurt the Chinese, damn their eyes.

  11. South Korea caves and that’s bad?

    And the actual protectionists among politicians hate what he’s doing?

    And left wing economists hate it?

    Where’s the down side here?

  12. “”Neoconservatives never wanted President Bill Clinton to normalize trade ties with the Middle Kingdom, but he did it anyway.

    Yep, and then some.

    When Bill was the Gov of AR, he courted the Chinese on business interests. Even had a bunch fly to LR in the Concorde. The first an only time that aircraft landed at LR’s airport.

    1. Then a bunch of Chinese nationals were caught illegally funneling millions of dollars into the DNC and Democrat campaigns in the ’96 election. Janet Reno’s investigation absolved the Clinton administration of any wrongdoing, they were uncooperative with Congressional investigations, and the DOJ refused to appoint an independent counsel despite Clinton’s own FBI Director demanding one.

      1. Investigations should only be taken seriously when a republican is the subject of it.

  13. So China now determines our economic policy? Really? Reason has always claimed that even talking about tariffs will cause a trade war and end the world as we know it. Now that this has proven to be complete bullshit, we are supposed to believe that tariffs are going to cause the Chinese to go to war with us.

    If the Chinese demanded that we repeal the First Amendment or enact harsher drug laws, should we do those things to? If the threat of war with China should govern our trade policy, why shouldn’t it govern any other policy that the Chinese choose?

    1. John you would defend Trump if he fucked a porn star right after his wife gave birth and then paid hush money right before the presidential election.

      1. I would care about that about as much as you cared about Bill Clinton raping Juanita Broaderick.

        1. John, do you remember what your thoughts about the Bill Clinton scandal was, generally? For example, did you care about the perjury then? I am not trying to trap you or anything, just genuinely curious.

          1. I cared about the perjury and banging an intern sure. But I lost that argument. We had this argument in the 1990s and my side lost. Sex and the behavior of the President don’t matter. Bill Clinton served out his term.

            So what I or you or anyone else thought about that at the time really doesn’t matter. We settled the argument. These are the new rules and that is the way it is. The Democrats can’t now come back and claim everything they used to claim mattered now does. If it didn’t matter for Clinton, and since Clinton was never removed from office, it didn’t. It doesn’t matter for Trump. That is the way it is. What I or you think it should be doesn’t matter.

            1. Democrats always want it both ways.

          2. If Bill Clinton had resigned or left office, then the people who caused that would absolutely be expected to call for the same with Trump. But he wasn’t. So, Democrats can’t now claim that Republicans are expected to apply rules to their President Democrats refused to apply to their own.

            1. Basically for me as well. It’s a fight that my side lost. C’est la vie. Don’t expect me to slit my wrists over infidelity now.

              1. How terribly convenient. And if Obama had fucked around?

                1. It wouldn’t have mattered because people like you would have said it didn’t. So it shouldn’t matter now. If Obama had cheated, you wouldn’t have cared. So how can you expect Republicans to care if Trump cheats? You just want a double standard. Well fuck off. Trump will be held to the same standards you and your ilk held Clinton and Obama, no standard. If you don’t like that, try having some standards.

                  1. It’s not my hypocrisy that’s on trial right this second, because I don’t have any.

                    Nobody in the fucking galaxy believes that you’d just brush it off if Obama had been caught banging a porn star.

                    1. So Tony, you defended Clinton, would have defended Obama but now demand that Republicans turn on Trump. But you are not being hypocritical? Are you that stupid? Do you lie to yourself that much?

                      If you wanted this shit to matter, you should not have defended Clinton. You did and now you are stuck with the results. Sorry but your desire to hypocritically hold Republicans to a different standard is not going to convince anyone. Fuck off.

                    2. I was an anti-Clinton Republican until Bush lied the country into war. Don’t presume to tell me what I thought at the time.

                      The absolute indisputable fact–and I mean indisputable even by the world’s best trashy lawyer–is that you’d call for Obama’s head if he had spent one day as Trump does. You probably even bitched about his golfing.

                    3. “I was an anti-Clinton Republican”

                      Tony, you were never a republican.

                2. He did, he fucked all Americans!

            2. So your “standard” is that you let your opponents define your standards for you? Is that it?

        2. John, I’d personally care less unless it turns out that he raped said porn star.

          I’d be more upset about a President fucking a homely intern when he was, you know, the President and all. Set some standards.

          1. If he raped someone, that is different. But, he didn’t.

            1. There are about a dozen women who claim otherwise.

              1. None of whom are credible. Certainly not as credible as Broaderick. And she wasn’t credible enough to matter in the 1990s. So, they certainly are not credible to matter now.

                Trump is going to be held to the same standard Bill Clinton was held.

                1. What does it feel like to have a tiny flick of black ash where a soul is supposed to go?

                  1. Why’s it gotta be black?
                    That’s some racist sh*t right there

                  2. Ash is grey.

                    Soot is the black stuff you’re thinking of.

                    The more you know……….

  14. Yeah, the easiest thing for China to do is to ramp up their South China Sea imperialism. That could become a huge, expensive mess for the US if they want it too.

  15. Only 45 minutes until the PM links! I can’t wait.

    1. Shuffleboard until then! Then dinner and bedtime after.

  16. Is France, e.g., wrong to protect its agriculture industry if they could buy all the food they need, at a lower cost, from the Germans?

    As George Mason University’s Tyler Cowen points out, if America were to stop buying Chinese toys, China couldn’t simply reroute the toys and sell them to Indonesia at the same price.

    That’s a flippant example. Food and steel are the same as toys?

    1. It is only wrong if you think having its own agriculture industry is not worth the higher cost in food. Whether it is or not is not a question with a definitive answer. It depends on how much you value agriculture relative to how much you value cheaper food.

      1. John, you are ignoring the military/defense aspect of this. If you hand over your country’s means to produce food to a traditional enemy you are damn fool. A democrat (and most republicans) would do that in a heartbeat, but a king wouldn’t. Return of Kings! Not really, but there’s got to be some markers in the ground that cannot be passed that allows a country to weather a storm.

    2. Cucumbers anyone?

  17. Wow – now I know how the Drumpfenc?cken must feel every single day. I’m sorry. So very, very sorry.

  18. Having a trade deficit with one partner is not a problem. After all, I have a “trade deficit” with my local supermarkets: I spend buy stuff but don’t sell anything there, so I spend more money (non-zero) than I get back (zero). But when I was working, I ran a trade _surplus_ with my employer: they paid me money for my labor. That’s also true for the people who buy my wife’s small-press magazines — they send her money and get the magazines, but the only time they get money _from_ her is if they cancel their subscription: then she sends them their unused balance.

    But having a trade deficit with the whole world is not good. It means we’re spending more than we’re taking in. As the old saying goes: weekly income 5 pounds, outgo 4 pounds 19 shillings — result: happiness. Weekly income 5 pounds, outgo 5 pounds 1 shilling — result: misery.

    It basically means we are spending out national capital, and sooner or later we will run out. Then things will be very uncomfortable.

    Aside from that, I agree with everything that Dalmia said.

    1. Yes. I only am able to maintain a trade deficit with my grocery store because I have a trade surplus with my employer.

      1. You must be a shitty employee if the company pays you more than they make off you.

        1. They buy my services. The surplus is the money. The exchange is always even. You don’t understand how trade deficits worK

          1. The whole concept of trade deficits doesn’t even make sense in this context.

    2. “It basically means we are spending out national capital, and sooner or later we will run out. Then things will be very uncomfortable.”

      Actually it means we’re borrowing from China, and everything will fine as long as the credit’s OK.

      1. “My credit card has no limit! Wheeeeeeeeeee!”

        That’s sure to end well.

    3. Barry, a trade deficit is completely meaningless, as it does not capture the full impact of the transaction. Its just a measure of stuff the crossed a border. A company that buys a bunch of Chinese stuff, and then sells it to Americans, shows up as a trade deficit. So what ? It makes no sense to force (via tariffs or whatever) some equal amount of goods to be sold back to the Chinese.

      Firms and individuals do the trading, and they only do so if they have some economic benefit. A trade deficit in no way means we are spending our national capital.

  19. The Geopolitical Risks of Trump’s Protectionism
    If China can’t fight back economically, it’ll fight back with guns.

    Shikha, you are one of the worst journalists I have ever seen.

    China is a communist nation, so fighting with guns is their bread and butter.

    China is not building man-made islands in the South China Sea for nothing.

  20. “But it could retaliate on other fronts?for example, by re-igniting its ambition to annex Taiwan, accelerating the militarization of the South China Sea, encouraging North Korea’s nuclear ambitions, and expanding its influence in Asia as a counterbalance to America.”

    So… China might retaliate by doing what they’re basically already doing?
    Well, I guess it’s time to capitulate then!

    1. You’ve been paying attention then.

    2. Sun Tzu wrote the highest form of warfare is to attack an enemies system of alliances. I expect China to put more effort into ‘expanding its influence in Asia.’

      1. That’s insightful, as I’m sure China is currently putting less than maximum effort into expanding its influence in Asia.
        Right?
        Everything makes sense now! China’s been half-assed about expanding its influence in Asia!
        And I bet if they just build a few more militarized islands in the South China Sea, Thailand and Vietnam won’t even think of running to mean ole USA. Meanwhile, if they just push some more troops into Tibet it’ll show India just how neighborly China is, and that there’s no need to turn to mean ole USA!
        Sun Tzu must be so proud.

        1. Korea is where the action is. There are communists running both north and south. A great opportunity for communist China to disrupt US alliances. I should have made that clearer. Sun Tzu is no longer with us. He died couple thousand years ago, if my memory serves.

    3. I will love to hear the progressive fucking capitulation to China militarily annexing Taiwan when it happens within the next decade. All these fucking coward pieces of shit letting an American ally, a capitalist democracy, be bullied by some totalitarian fucking pieces of trash.

      But hey! Can’t disrupt the supply of money and technology to the Commie fuckers pockets so they can create a first rate army and navy capable of crushing any resistance! Perhaps if we ask for leniency they will not bully us like they do the Taiwanese or Tibetans or Uighurs!

  21. “Beijing might not be able to respond to Trump’s economic bullying in kind without hurting the average Chinese. But it could retaliate on other fronts?for example, by re-igniting its ambition to annex Taiwan, accelerating the militarization of the South China Sea, encouraging North Korea’s nuclear ambitions, and expanding its influence in Asia as a counterbalance to America.”

    I’m having a difficult time following your logic. Where did the military retaliation bit come from? The rest of the article was discussing trade.

    And how have China’s rulers made ‘very great effort’ to keep their manifest destiny nationalism in check?

  22. “As for China grabbing trade secrets: If American companies are willing to do business in China despite such demands, that’s their problem. Europe forces American pharmaceutical companies to sell drugs at severely discounted rates, but not even Trump is suggesting that Uncle Sam needs to take retaliatory action against that.

    If the Trump administration were to use this power to pry China’s markets open further, that would be one thing because it would integrate the two economies even more.”

    1) The EU is not a commie totalitarian mafia protection racket committed to stifling democracy and individual rights. China is
    2) I personally have ZERO INTEREST in deeper integration with commie fucks who train every single day of the year to kill American sailors, marines, airmen, and soldiers. China can go fuck itself and so can you.

    1. “1) The EU is not a commie totalitarian mafia protection racket committed to stifling democracy and individual rights. ”

      Not quite yet. But Merkel is working on it, and she’s made a lot of progress.

  23. “Some are real but are none of the government’s beeswax, such as the fact that China forces foreign companies to fork over trade secrets to do business there.”

    Trump wants to get the Chinese not to demand payment in terms of intellectual property for access to their market, and Reason pooh poohs this as “none of the government’s beeswax”.

    American tariffs are “protectionism”; Chinese “give us your IP or you can’t sell here” is what?

    This is the “Free Market” Reason champions now that TDS has taken hold. As long as it’s good for 2 Minutes Trump Hate, intellectual coherence is out the window.

  24. I wonder. Could Shikha be a Trump plant?

    She’s already converted over half the commenters to oppose immigration by her asinine Trump hating Open Borders articles.

    Seems like she’s working on discrediting Reason’s Open Trade stance now.
    MAGA!

    Please, Reason, don’t through another Shikha article into the briar patch with us! 😉

  25. Another fact free, poorly reasoned article from Shikha.

  26. Jesus Christ!

    She is so insane. So I haven’t seen super specific details of the SK deal… But basically, Trump just did EXACTLY what any non moron would assume would happen, which is to say he “Won” in getting a better trade deal for the US and US businesses. China just punked out too, because we have the upper hand, and anybody who isn’t a moron knows this…

    Yet SOMEHOW, we’re supposed to give away the farm on our end of the deal, but no matter what nasty dealings the other side is doing, we’re just not allowed to demand a fair deal… Even though we have the upper hand in the situation.

    MORONS like this are what got us in this situation in the first place. When you’re the richest AND most militarily powerful country on the planet, you should probably negotiate AT LEAST a fair deal, if not one slanted in your favor. You don’t intentionally negotiate an unfavorable deal, which is what our pols have done for decades.

    Trump is basically winning on this front, but you have such bad TDS you’re trying to spin it as a bad thing. LOLOLOLOL

  27. Shikha Dalmia needs to fill in an obvious gap in her education:

    http://tinyurl.com/yas2hrm5

    “We never pay any-one Dane-geld,
    No matter how trifling the cost;
    For the end of that game is oppression and shame,
    And the nation that pays it is lost!”

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