Free Trade

The U.S. Just Imposed New, Higher Tariffs on China. Blame Trump's Faulty Trade War Strategy.

If the United States had pursued a different strategy from the outset of the Trump administration, it might now be in a position to counter China's hardball tactics.

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This morning it became official: The trade war between the United States and China has escalated.

High-level trade negotiations that ran into the final hours of Thursday night proved fruitless, and at midnight the United States began the process of raising tariffs on about $200 billion of Chinese imports from 10 percent to 25 percent. New tariffs of 25 percent on an additional $325 billion of Chinese-made goods are also being implemented. In an early morning tweetstorm, President Donald Trump said that talks with China would continue and defended the decision to impose new and higher tariffs; he avoided noting that they're really a tax on American importers, businesses, and consumers. China has vowed to retaliate, but it has not given any specifics so far.

Clearly, the trade war that was supposed to be "good and easy to win" has now entered a more dangerous and destructive phase. After nearly a year of trying to use tariffs to force China to negotiate a trade deal without success, the president seems to believe the only solution is more tariffs.

Time will tell if he's right about how China will respond. But in the meantime, those new tariffs can do serious damage to the American economy. More than 2.1 million American jobs could be lost and the average family of four will face about $2,200 in higher annual costs, according to a study from The Trade Partnership.

"We want to see meaningful changes in China's trade practices, but it makes no sense to punish Americans as a negotiating tactic," said David French, a vice president at the National Retail Foundation, in a statement. "If the administration wants to put more pressure on China, it should form a multinational coalition with our allies who share our concerns."

That was one of the biggest missed opportunities of the Trump administration's trade policy. If you're looking for the moment that brought America to this latest escalation of the trade war, you have to look back before the Sunday morning Trump tweets that rattled markets and set off a week of uncertainty. Before the Chinese reportedly reneged on key details of the nascent trade deal. Before the start of the trade war last summer. Before the threats of tariffs on steel and aluminum and washing machines and the rest. Even before Trump was president.

You have to go all the way back to April 2015, two months before Trump declared his candidacy. That was when the future president first lashed out, on Twitter of course, at the Trans-Pacific Partnership, a multilateral trade agreement the Obama administration was negotiating with about a dozen other countries. China was not part of the TPP. The proposed pact was seen as a way to counterbalance China's growing influence over the region.

"If confronting China and getting it to do a better job of abiding by the international trade rules is the objective, we blew the two best opportunities to make that happen," says Dan Ikenson, director of the Center for Trade Studies at the Cato Institute. The United States should have not have withdrawn from the TPP, argues Ikenson. Failing that, Americans should have confronted China through the World Trade Organization, bringing complaints that could have been backed by the European Union, Japan, Korea, and others.

"There is power in numbers in these circumstances, but the Trump administration has insisted on going it alone," Ikenson tells Reason. "Inevitably, we Americans will bear the costs of those calamitous decisions."

That swaggering, go-it-alone mentality has defined much of this administration's policy toward the rest of the world. The president believes he can strike better deals in one-on-one settings than as part of an international community. But so far, he has precious little to show for it. After hitting steel and aluminum imports with tariffs last year, the Trump administration promised to remove those trade barriers as soon as other nations worked out unilateral trade deals with America. A couple deals materialized, but not many.

Trump clearly relished the chance to pick a fight with China. But he went into it without allies, and he may have given China leverage in several important ways. As The Wall Street Journal reported this week, China was encouraged to play hardball because it saw Trump's constant hectoring of the Federal Reserve board to lower rates as a signal that the U.S. economy was slowing. Dragging out negotiations into the 2020 president election also gives China more power, as Trump could be politically weakened if he does not deliver the promised deal—and as tariffs take their inevitable toll on the economy, the strength of which is central to Trump's political messaging.

He could also face a congressional revolt from within his own party. "There's a lot of feeling in farm country we're being used as pawns in this whole business," Sen. Pat Roberts (R–Kansas) tells The Washington Post. The new round of tariffs could give Congress a greater incentive to claw back some of the trade powers handed to the presidency over the past decades.

If the United States had pursued a different strategy from the outset of the Trump administration, it might now be in a position to counter China's hardball tactics with alternatives that don't include higher taxes on American businesses and consumers. As it stands, the options are limited—and Trump does not seem ready to walk away.

"Economic sanctions rarely work to compel governments to do things they don't want to do," says Ikenson. "Trying to force a large country with a large, diversified economy and an historical chip on its shoulder to behave as we wish by levying massive tariffs unilaterally—imposing higher costs on ourselves—is a fool's errand."

As for the decision to bail on the TPP, it may be a little unfair to lay that entirely at Trump's feet. Give the voters a share too. Trump was the loudest anti-TPP voice in the 2016 Republican primaries, and his success—along with the impact of Sen. Bernie Sanders (I–Vt.), another anti-TPP protectionist—in running against the trade deal was enough to convince Hillary Clinton to turn against the TPP during the 2016 campaign.

Shrewd politics can lay the groundwork for bad policy. Whether following his own instincts or following the will of the people, Trump yanked the U.S. out of the TPP negotiations shortly after taking office. It's a decision that looks especially myopic in retrospect—one that effectively sidelined useful allies and made the future trade war a one-on-one fight.

But it was a myopia tinged with ignorance. After all, Trump seemingly believed he was striking a blow against China. During one Republican primary debate, in December 2015, Trump went on an extended rant about how the TPP would benefit China. Sen. Rand Paul (R–Ky.) then leaned in to remind his rival candidate that China wasn't actually part of the proposed pact.

Trump is a master of creating his own political reality. But the real reality is coming back to bite him—and the rest of us.

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  1. Orange man bad.

    1. What is going to happen when we do have a “TRADE WAR” and the trade Gods do not punish the sinful American economy and none of the dire effects reason has so fervently prayed for materialize?

      1. So all of the actual-factual negative impacts already documented by Reason, week after week after week, were all fever dreams and lies made up by Reason? What planet are your facts coming from?

        If I document all of the higher prices that my family and I have paid, due to the trade wars / taxes, would you care to pay me back?

        1. Please do.

          1. I see a lot of correlative studies but few showing causation, and based upon the overall trajectory of the economy any impact is still fairly minimal. It could get worse but there isn’t much evidence of that yet. I have seen plenty of room and gloom reports that are long on opinion and short on actual data.

            1. Start here for starters. There’s TONS more of the same right here on THIS web site!

              https://reason.com/2018/12/11/study-claims-aluminum-tariffs-create-job/

              Aluminum Tariff Tradeoff: 300 Jobs for $690 Million in New Taxes

              1. >>>Start here for starters.

                funny. can start elsewhere?

              2. That is an interesting take. Three hundred jobs and possibly more on the way. On exchange American companied paid more for Chinese aluminum which has driven up demand for American aluminum. It would seem that this is less of economic crisis and more of a shifting of costs.

                1. $690 Million / 300 Jobs = $2.3 million per American each job gained. How much more of this “new math” can the American economy, and our standard of living, withstand?

                  If taxing Chinese goods in America is good, then perhaps taxing Texan goods in Oklahoma, and so on, would help us also, yes? Good jobs for good Oklahomies (Oklahomos?), I say!!!

                  1. If that $6.9 million was a static number you would have a point. But as US aluminum manufacturing increases, costs of tariffs will decrease. As for your straw man about Texas and Oklahoma, did you forget the little things called the Constitution, which for IDs that exact scenario.

                    1. As Reason documented, as soon as we pay more for Chinese imports, USA producers yank UP their prices to be slightly below what we have to pay for (Chinese prices plus tariffs) taxed imports… What reason now do American producers have to LOWER their prices, now that Chinese (and other foreign) competition has been removed? Protectionism works for SELECTED protected business owners, and the politicians that they “contribute” to, and no one else. Protectionism doesn’t work for the consumer.
                      If “good jobs for good Oklahomos, tax the Texan goods” is a straw-man because of the USA Constitution prohibitions against inter-state trade wars, then what? Complete the analogy… Superior USA Constitution prohibitions against inter-state trade wars are a GOOD thing, you are saying? Then OBEYING international prohibitions against stupid international trade wars would likewise be a good thing! (And yes, that is what I believe.)

                    2. And giving I to China benefits some companies while hurting others.
                      Finish your own analogy. China has repeatedly broken those international laws. And tour answer is to ignore those violations because China sells cheap stuff. I don’t support protectionism but I also don’t support ignoring China’s policy of illegally manipulating their currency to devalue it, their state sponsorship of corporate espionage and stealing of American intellectual properties, their punitive and protectionist tariffs and trade barriers to a number of US goods. This benefits a few protected businesses while hurting American manufacturing, tech industry, especially software, chemical and genetic engineering, and a number of American agricultural industries. My argument is that we have been in a trade war with China for decades, only we were pacifists in it.

      2. Jfc. This place has gone completely to shit. The majority of the commenters are defending tariffs. Tell me again how the right is better for liberty than the left? Two sides of the same shit coin. Hihn had it right: left – right = zero.

        1. Eunuch pimping hihn…

          Why am I not surprised

        2. Oh noes. people are questioning the sacred dogma!!

          The only thing that makes this place shit is idiots like you who can’t even be bothered to know your own position much less question and defend it.

        3. You’re not wrong. The real libertarians left a while ago. Now you just have Republicans in disguise who won’t dare question a single thing Trump does. See this story along with basically every one written in the past year to two years.

        4. The majority of the commenters are defending tariffs.

          Well, the “libertarian” argument against tariffs is that they are like a tax on the American people. And indeed they are. Given current deficits, we need much higher taxes anyway. So what’s the problem with tariffs then?

          Tell me again how the right is better for liberty than the left?

          Whereas your “libertarian” view is: “keep giving me the benefits of government coercion, but don’t cramp my style, bro”.

          Two sides of the same shit coin. Hihn had it right: left – right = zero.

          Actually, it’s even more universal than that: “left = right = libertarian = you”, because you all want government out of your life as much as possible and don’t want to pay for the benefits you receive.

      3. The effects are already happening. If you pull your head out of Trump’s ass you would see it.

        We have huge problems at my work getting the parts we need for manufacturing. There’s a lot of stuff we need that has an origin in China if you go down the supply chain far enough. Lots of stuff from US suppliers is now backlogged. It’s killing our schedule. We can’t switch to “pure” US suppliers for this tech stuff because they don’t exist. Small businesses are going under as we scramble to find other vendors at HIGHER prices that we will be passing on to our customers. As well as blowing up our own delivery schedule.

        And it’s NOT just Chinese parts. We can’t get some US made parts because somewhere down the supply chain China might be somehow involved. The overwhelming majority of chip manufacturing comes from China. We can’t get US made parts because of the stupid trade war with China.

        The idea that this is all just abstract numbers on a budget somewhere if fucking bullshit. You Trumptards don’t understand that it’s real working Americans that are getting fucked up the ass by Trump. Like it or not we have a global economy. Building an impenetrable barrier around the US doesn’t help the US worker, it slowly strangles him.

        1. Yeah Brandybuck go!!! SAY it!!!

          (Trade wars suck, just like shooting wars. They are NO good!)

        2. Very good point – but let me ask you this; When China under-cuts whatever it is you’re doing at your job and the U.S. subsidizes all the distance expenses (like it is already doing). Exactly what JOB are you going to need parts for if/when everything is created in China? I truly believe the status-quo is going to be tough to break from but also believe breaking from it is a undeniable corrective action and ignoring it will lead to entire collapse. In the BIG picture; The U.S. exports only 2/3rds what it imports!!! That’s 1/3 of the entire U.S. economy is on loaned dollars!

    2. China’s going to have a lot of trouble with tariffs on imports, being the world’s biggest food importer. Swine Fever Virus is destroying the pork supply and the fall armyworm is eating up all the agricultural crops.

  2. Time will tell if he’s right about how China will respond. But in the meantime, those new tariffs can do serious damage to the American economy. More than 2.1 million American jobs could be lost and the average family of four will face about $2,200 in higher annual costs, according to a study from The Trade Partnership.

    Sure, if you assume the economy is totally incapable of making any adjustments to what amounts to a sales tax and the goods in question both can’t be produced in the US and are so price sensitive that any raise in price will cause demand to fall to zero. Or in other words, in bizzaro world, that is likely true. Our world, not so much.

    1. People like Boehm have yet to go over all the damage that our managed trade (pre-Trump) caused the US economy.

      If the USA did not renegotiate to get lower trade restrictions, then we would continue to have the managed trade we had before Trump.

      1. +100; Our president can’t MAGA by carrying on the status-quo.

      2. Reason is more interested in defending the status quo where our economy is managed to the benefit of the elite. They aren’t interested in free markets. At all. Yet the trolls call the rest of us conservatives.

        China is a problem and they will use every means of economic aggression in order to harm our economy and shift the power in the world. Countries do not exist for markets, they exist for power and survival.

        This understanding is what is missing from our quasi-libertarian trolls and the writers of reason.

        Trade is a less violent tool than the military, but it is still a tool that is used to harm others. And like the military, we would be fucking stupid to sit back and take whatever aggression other countries throw at us, especially when we are far stronger and have no need to put up with that shit.

        1. People like the writers of reason are why the socialist left gains power.

          The left is very good at pointing out problems, and they are rarely wrong. The con is that their solutions are junk that are thinly disguised to give them more power.

          Reason quasi libertarians see a problem and stick their head in the sand or argue until their face turns blue to maintain the status quo. They are boring and soft and square. They are conservative by definition. Terrified that the neoliberal world order might change.

    2. I am surprised that so many people on here are having such a difficult time understanding the situation we are in.

      We do not have fair trade with China, period. We should have taken the steps that Trump is taking now, 10, 20, and 25 years ago. The idea that we can continue the status quo with China is absurd.

      Trade wars are a very bad thing unless the alternative is worse. 25% isn’t bad but Trump needs to go a whole lot higher to squeeze those bastards. Then we will have one of two outcomes, either China capitulates (likely), or the trade war goes on long enough that suppliers will pop up in the US, India, Vietnam, South Korea or elsewhere. That is actually the best scenario as China is going to be a problem on the world stage for years to come.

      The idea that Trump should be excoriated for protecting the US and US companies against theft and extortion is pathetic and very surprising to read on this website. It sounds like a bunch of children on here.

  3. Reason’s shilling for the TPP is perhaps its low point. Nothing says free minds and free markets like a transnational bureacracy and making the federal government law enforcement the strong arm enforcer of overly broad patent laws.

    1. +100

    2. Nothing says free markets like one man in office who makes arbitrary decisions about who can buy what from whom and for how much. Fuck off.

      Trump wouldn’t know a free market if it crawled up his butt and poked him from the inside. This is a man who made his billions through his insider connections to city and state political machines. Who uses the power of the state to steal houses from old ladies so he can build casinos. He is the crony in chief.

      1. I’m sure John will have a very witty reply to this. It of course will be just as worthless as his other posts but just so you’re forewarned.

        Kudos because you’re absolutely right.

      2. Both sides in this debate have made valid statements & we will not know the ultimate result until a deal is done or not, but the point raised here is what bothers me the most: WHY IS SUCH AN IMPORTANT THING DECIDED BY THE PREZ ALONE???….Shouldn’t this be done by Congressional input, debate & then vote?

      3. This is a man who made his billions through his insider connections to city and state political machines.

        Yes, and he ran on that. His argument was that he understands these mechanisms and is therefore in a good position to try and do something about it. And he has done quite a bit already, among other things by substantially cutting back the regulatory state.

  4. You can also blame moronic media types like Boehm who give the Chinese hope that their authoritarian ways will pay off.

    If Trump does not have media support at home, why would the Chinese want to give in an lower their trade restrictions?

  5. Excellent facts-based editorial, ERIC BOEHM !!! SPEAK those truths!!!

    Some have prophesied…

    ‘A) Trump has mastered quantum gravity, and will WIN at 11-dimensional chess!!! You CAN get good long-term results by treating everyone else like shit, or at the very least, like dogs under the table, happy with whatever scraps may fall…

    v/s…

    ‘B) What comes around, goes around. Shit on others, and they shit right back. ALSO, when getting into a contest of who can cut off more of their noses to spite their faces, the WINNING strategy is to NOT play the game at all!!!

    Speaking of games, this game is getting more and more tilted to “B” winning the argument, for all, in all minds except the die-hard support-The-Donald-at -all-costs crowd.

    1. Turning the other cheek is definitely a short term strategy. The Chinese have been less than honest trade partners since the 1990s. Additionally, they have been becoming an extremely belligerent world player for at least the last decade. Something should change, maybe Trump is going about it wrong, but I have heard few better plans. The TPP was just another form of managed trade that only minimally benefitted most American industries. Individual trade deals are far more desirable.

      1. But China was NOT a party to the TPP! If the USA wants to punish China, punishing everyone else is NOT going to help! ESPECIALLY if it involves heavily punishing us consumers, farmers, and industries!

        1. Did I say China was part of the TPP? I was referring to the author’s unsupported assertions that the US staying in the TPP would have made China more willing to negotiate in good faith.

        2. Punishing industries is a questionable assertion. Some seem to be benefitting while others have been hurt. I see little actual evidence consumers have been hurt. Farmers have been hurt hut the trend was not good before Chinese trade war. In fact China routinely would deny US farm goods for no other reason then to cause a commodities sell off and then they would buy cheaper. Farmers are unhappy about prices but most I know (I am an agricultural extension agent) feel reining in China (which has ling treated them badly with high tariffs and trade restrictions) is necessary.

          1. Also, despite no provocation the Indian government slapped huge tariffs on US pulse crops before Trump started his trade war with China. This pulled down all grain prices, and they never recovered. So blaming low commodity prices on China is less than honest.

        3. But China was NOT a party to the TPP!

          And the TPP wasn’t a free trade deal.

      2. Yes. Well said.

        I don’t know what the “answer” is, but just bending over and accommodating the Chinese Schlong is not appealing, at least not appealing to me.

  6. Poor Boehm.

    DOW Jones May 10, 2018: 24,739
    DOW Jones May 10, 2019 at 11am: 25,521

    1. Elementary facts for those living in the real world: Correlation is not causation. I brush my teeth in the morning, and the sun comes up in the morning. Brushing my teeth does NOT cause the sun to rise!

      Also, stocks go up so that the rich can get richer. Poor people don’t buy many stocks, but they do pay boatloads of cash (taxes, tariffs) for The Donald’s sins!!! They pay extra tariffs, but don’t earn it back in more high-paying jobs… Especially the poor elderly, who are beyond their working years. When these abused poor start (admittedly stupidly, but what else can they do?) voting for commies like Bernie, to counter-act the shit getting dumped on them by Trump, WHO are you gonna blame?

      1. Pretty sure my retirement plan is mostly stock based, as are most working Americans. So tell me how stocks are on purchased by the rich again? God you are getting even less coherent. You might want to seek help for that.

        1. Not to mention stock investments drive corporations, which in turn employ the majority of the private workers in the US, therefore, higher stock prices benefit everyone.

          1. Who owns more stock per capita, the rich of the poor? Who pays more tariffs-taxes as a percentage (of their income) on raised prices for food, toys, appliances, basics needs, etc.? The stock market is DOWN because of more trade wars, but it is admittedly not a HUGE percentage down. … In any case, stock market good but basic prices inflated favors the rich, not the poor. REGARDLESS of how many times that The Donald lies, and says that He is punishing the Chinese, w/o (or more so than) punishing USA consumers!

            1. How do tariffs raise food prices when the USA products far more agricultural goods the we can use. The vast majority of American food is grown and produced in the USA. Try again on the higher food prices.

              1. You’re correct for a huge number of types of foods in the USA. Pork comes to mind…

                https://www.eater.com/2018/7/18/17527968/food-tariffs-trump-canada-china-mexico-eu

                Wait a few years until the pigs are slaughtered and very few are raised any more, because the farmers can’t make a profit. THEN we will pay! The same applies to many food items, where lead times are long. Think of how many years it takes for a pecan tree to grow, before the nuts are worth gathering. Agriculture cannot turn on a dime, and tariffs yanked all over the place, randomly, regularly, makes doing business VERY risky! Might as well quit farming, and go on welfare!

                Also there are some foods (tomatoes from Mexico for example) where we pay MORE now, because of the trade war (American protectionism). Sugar is the same way.

                1. Wait a few years and farmers will adapt. I work with farmers and they are extremely adapt at changing. Pork farmers will either
                  decrease production or seek new markets (if it lasts that long).
                  As for sugar, reproduce more than adequate sugar in the US and can produce even more. And we have a trade agreement with Mexico, i.e. no trade war.

                  1. Pay more for tomatoes very soon. Thank Trump!

                    https://reason.com/2019/05/08/tomato-tariffs-pit-florida-against-arizona/

                    Tomato Tariffs Pit Florida Against Arizona
                    America first? It really depends on what part of America you live in.

                    1. Ah, the face of modern libertarianism: defending a price fixing agreement on tomatoes and special treatment of a specific good in the name of liberty!

                  2. China has the Swine Fever Virus and the fall armyworm to increase its demand for pork, grain, and pulses. They’re the world’s biggest food importer and food production in China is dropping like a ton of bricks. The Chinese can’t live without pork, so just be patient.

            2. And if you look at retirement plans I can guarantee the middle class owns a significant percentage of stocks

              1. According to studies 54%of Americans do own stocks. Yes the wealthiest own the most stocks but that’s a meaningless stat. The stock market benefits everyone, not just the wealthy. The wealthy also tend to own more expensive real estate, so does that mean property ownership only benefits the wealthy?

                1. 78 percent (from Google search)
                  Nearly 80 percent of American workers (78 percent) say they’re living paycheck to paycheck, according to a 2017 report by employment website CareerBuilder. Women are particularly vulnerable: 81 percent of them report living paycheck to paycheck, compared with 75 percent of men.Jan 9, 2019

                  So how many of these people own stock? If they own some, how much? Seems that the “stats” conflict a bit… I think it safe to say that large numbers of (poorer) Americans would rather NOT pay 20-25% more for their purchases (when they chose to buy Chinese products), AND have their few stock go ONLY SLIGHTLY down, as they have recently. The trade war is a bigger pain than gain for the less-rich folks…

                  1. When you include 401 k and other retirement plans the majority of those living paycheck to paycheck. And living paycheck to paycheck is hardly a new thing. However, the fact that wages have increased steadily since the number you cite (which was from 2017), while inflation’s remains comparably low (and purchasing power has increased not decreased) it is more than likely that percentage has dropped. Additionally,define living paycheck to paycheck. The fact of the matter is that Americans,at almost every level have far more luxuries then we did even 20 years ago.

          2. Actually a majority of private workers are employed by small businesses that are not publicly traded, however they still benefit indirectly from higher stock prices (because their employer might be invested, or perhaps their employer has these larger corporations as customers, etc)

        2. As is mine and in individual stocks, not funds for the most part so I try and keep up on what is going on.

          In the big picture most companies are doing fairly well because they are hitting targets for revenue, or close to it. Investors are trying hard to not panic. We do the work, not the government. The corporations are buying back with profits and the tax breaks to keep up stock prices. That is way to control the bleeding but it does not fix the problem.

          Investors are for the most part betting that a trade agreement will happen eventually. What those of us individuals who try to invest in solid companies in the Buffett way of thinking worry about is volatility which is happening now.

          Trump was never a stock guy. His highly leveraged real estate deals without a public company allowed him all kinds of shenanigans. He is treating the US as his own private company and gambling with it which is worrisome.

          SQRLSY has a point which is that investments aside the consumer only loses. I need a new pair of shoes for the walks I take with the dogs. Eventually I will pay more for those Nikes.

          Double taxes for things like basic food. Since farmers are less competitive Trump has promised more subsidy for some goods to keep up prices. So I pay more at the grocery.

          Tariffs are bad. Trade is good. The new TPP signed without the US creates a low tariff trading block which we are not a part of. The loaded ships between Canada and Australia are a loss for us. Now with Trump in charge we must create individual agreements.

          1. If anything the trade wars has created a surplus in agricultural goods. The American consumers will actually pay less because less American farm goods are going to foreign trade and thus must be used in the domestic market. It’s the status quo which hurts American farmers competitiveness. We produce more agricultural goods for less money than anywhere in the world. Most countries slap huge tariffs or restrict the importation of American agricultural goods to protect their own, generally far more heavily subsidized, agricultural industry.

            1. We have always had a surplus in agriculture.

              To make a profit suppliers need export markets.

              Tariffs cut those markets.

              1. Agriculture is about 1% of the US economy. On top of that, agriculture receives more than 1% of US government spending in subsidies, is responsible for probably half of illegal migration into the US, and imposes massive environmental externalities on society. The situation in other nations isn’t much different.

                It’s absurd to defend policies on the grounds that they interfere with a free market and trade in agriculture because we never had one in the first place.

                You want to do something for liberty and free markets? Start cutting agricultural subsidies to zero.

  7. Why not just drop tariffs to zero on imports from all of China’s neighbors (or beyond)? That will lessen China’s competitive advantage, while simultaneously only increasing the ability of Americans to source their products from wherever is most cost-effective.

    1. If those nations collectively produced the same or similar basket of goods that would be a good approach.

      But they don’t, and in some cases they do not specifically due to direct influence from China.

      Boehm and the rest of Reason pretending that the election of Trump is Year Zero in Trade Relations is getting really, really silly.

      1. “…collectively produced the same or similar basket of goods that we purchase from China…

        1. They will, as companies are moving out of China to cheaper countries like Vietnam and Burma. Taiwanese companies are moving back to Taiwan. The bloom is off the Chinese rose.

      2. But they could. Some of those countries are pretty big (India) and advanced (Japan and South Korea). Putting taxes on American citizens is an awful strategy. Allowing American investments to diversify organically by reducing/eliminating tariffs on allied nations will long-run disadvantage China.

        Will that cause things to change more slowly? Yeah, probably. But it comes down to whether you believe the president is also the American salesman-in-chief, or just believe that the gov’t exists to provide for the rule of law.

        Lastly, of course Trump isn’t Year Zero in trade relations. That doesn’t mean his actions aren’t ridiculous.

        1. They could, if they had the sort of investment (governmental or otherwise) that the Chinese government extends to their state sponsored businesses.

          Of course, if that sort of capital was realistically available, the whole point would already be moot.

          1. Eliminating tariffs may eliminate one barrier to entry, but it is absurd to think that does anything about all the other barriers.

            1. Ridiculous requires context.

              There is no context here.

              1. And that is ridiculous.

          2. Well, for US companies that have outsourced, the capital may come from them, as they try to avoid IP theft and political risk. For companies that are completely in China…so what if they want to give us cheap stuff?

      3. “If those nations collectively produced the same or similar basket of goods……. But they don’t” — Exactly;

        China waivers their VAT tax on all exports and the U.S. tax-payers subsidized the import shipping. Politics is what made the mess we’re in.

  8. The US must surrender. Immediately. We must also turn over all personal information to the Chinese military, along with all trade secrets and intellectual property. Then we can buy F35s and aircraft carriers, etc from HuaWei at steeply discounted prices.

    It’s the only way and sound economic reasoning demands it.

    1. China isn’t compelling us to do anything at all. They just offer goods at a certain price and we can buy them (or not).

      1. You missed the part about them hacking computer systems to steal private information about American citizens and others. Also, theft of intellectual property, trade secrets, industrial technology, etc.

        China is actively doing all of that, as well as trying to lay claim to the south China sea. They are absolutely not trust worthy.

        Is none of that stuff worrisome to you?

        We will wind up in a shooting war with China if they don’t rein in that behavior.

        1. I’m an American citizen living in Free China (Taiwan) and am ready to pick up a T-91 to shoot the Commie bandits if they TRY to invade. The USA will never allow Chinese air bases, naval bases, and submarine pens, and free access to the Pacific in La Isla Formosa. Ain’t gonna happen, Pooh Daddy!

  9. “More than 2.1 million American jobs could be lost and the average family of four will face about $2,200 in higher annual costs, according to a study from The Trade Partnership.”

    —-Eric Boehm

    I’m looking at the study.

    https://tradepartnership.com/wp-content/uploads/2019/02/All-Tariffs-Study-FINAL.pdf

    Here’s what it says:

    “Base Scenario plus U.S. tariffs of 25 percent on all remaining imports from China, plus Chinese retaliation:

    Annual impact on dollar value of U.S. GDP (percent) : -1.01Annual impact on family of four: $2,294
    One-time net impact on U.S. jobs -2,159,500

    Before we get to the statistics, however, it says the following:

    “This study examines the economic effects of these actual and threatened tariffs on the U.S. economy and U.S. workers one to three years after they have been in effect.”

    Those statistics are for the cumulative effect of three years worth of each scenario. If Trump were to keep these tariffs in place for three years, a family of four would face an additional $2,294 in costs over that time period.

    There are a few caveats we should keep in mind.

    One of them is that it is unclear that Trump wishes to keep these tariffs in place. The sticking point, before this week, was when and how to phase the tariffs out on both sides. Xi wanted them ended immediately, but Trump wanted to keep them in place until Xi implemented the protections against forced technology transfer, etc. They compromised on both cutting them in tandem down to a certain percentage, with the rest disappearing after China implemented the protections against forced technology transfers. If there’s a deal, that’s what will probably happen–not three years of this scenario.

    The other thing to keep in mind is that we’re not talking about inflation spiking up over this. While some costs may have risen over the last year, when the trade war really began, inflation has remained in check. Wages are more than keeping up with inflation, productivity has risen through the roof–in a report that came out two weeks ago, after this report was released. Some of those costs may be eaten up by wage gains, eaten by employers, etc. No doubt, if you’re buying a lot of things made with aluminum, prices have gone up, but inflation really hasn’t been a problem over the last year–which is why the Fed regretted raising rates.

    I oppose Trump’s trade war, but doing so on the basis of all the harm that’s been done to the economy over the last year is a hard sell when the economy is humming along so nicely–sans inflation. If Trump’s tariffs stay in place for three years, the economy may continue to grow without inflation being a problem. The issue may simply be that the economy would have grown more than it did–and that’s a perfectly valid reason to oppose a trade war.

    The inability of Malthusians and socialists to consider the future they’re forgoing is often their Achilles’ heel.

    1. “The issue may simply be that the economy would have grown more than it did–and that’s a perfectly valid reason to oppose a trade war.”

      Amen to that! I see all to often in the comments here, “Well the USA economy is doing well right now, so tariffs must be working, and a GREAT thing.” Well, for all we know, if all had stayed the same, but the USA had NOT started a trade war, we might have thousands of colonists on Mars right now. And an anti-gravity pod in most of our driveways!

    2. The issue may simply be that the economy would have grown more than it did–and that’s a perfectly valid reason to oppose a trade war.

      I think this is it (it is my reason for opposing the trade war). That, and the incorrect framing of the whole thing as if the US and China were each giant businesses. In reality, both have a lot of enterprises that compete and cooperate with each other.

      The whole thing just feels like either a protectionist grab at free shit or a way to boost national ego.

    3. I don’t mind paying one or two cents more per can of beer if it upsets Pooh Daddy.

  10. Getting out the the TPP was good policy. What that agreement had a few good clauses, it also had some really ugly … what are the opposite of easter eggs? Anyway, the bad in TPP far outweighed the good.

    This tariff war with China, on the other hand, is just self-destructive. How many economists have to say it before the politicians listen? Tariffs are nothing more than taxes on your own citizens!

    1. “taxes on your own citizens” – lets get over the media propaganda eh?

      Tariffs are taxes on FOREIGN merchandise / products. Yes, those citizens who CHOOSE to buy FOREIGN pay the tax. Those who CHOOSE not to buy foreign DON’T.

      Our International government has a constitutional enumerated power to regulate FOREIGN trade. It must have been put there for a reason.

      1. “Tariffs are taxes on FOREIGN merchandise / products. Yes, those citizens who CHOOSE to buy FOREIGN pay the tax. Those who CHOOSE not to buy foreign DON’T.”

        What century are you living in? As long as you have no desire to use a cellphone or anything with an integrated circuit, than the foolish statement you made could *perhaps* be feasible…..but probably not even then. Reality is a bitch.

        1. Reality is that we have massive, unsustainable budget deficits. We have those because we have much lower tax rates on the middle class than other industrialized nations. We either need to drastically cut spending (not going to happen) or drastically increase taxes.

          So, yes, tariffs are a tax. They are a tax on consumption and will hit the middle class hardest. That is exactly what we need, because it’s the middle class that keeps voting for more and more spending.

          It’s unfortunate that the trade war with China won’t increase taxes on the American middle class much more dramatically. But to argue that tariffs are bad because they amount to a tax is frankly laughable given current US budget deficits.

        2. So… The justification is…. The U.S. has absolutely !!-0-!! cellphone manufacturing or creation going on – just as it is so with 33% of the entire U.S. consumer goods market. That’s right – Every year 33% of what the U.S. consumes in “on loan bill” and only 2/3rds is returned on U.S. goods. How is that sustainable down the road?!?! Yes, the reality of it is a bitch; Ignoring that reality just just make the “bitch” grow bigger.

    2. Tariffs are nothing more than taxes on your own citizens!

      Have you looked at the US budget deficit recently? The US needs much higher taxes to sustain its current levels of spending. Massively raising income taxes on the middle class would be the obvious answer, but that’s politically infeasible. Imposing a 20% national sales tax would be another option, but again is politically infeasible.

      Whether intentional or not, raising taxes through tariffs is a good thing precisely because it is a tax on the American people.

      1. no, fed.gov should reduce spending not taxes. taxation beyond the minimum required to run the gov is simply theft. why am i paying to bomb people in yemen? how is that required to run the gov? why am i paying for welfare programs? how is that required? let people keep their money and donate it to charity instead of giving up more than half of it every year to .gov (don’t believe it’s more than half – try figuring out how much of every dollar you spend ends up going to taxes – regardless of who pays those taxes, it comes out of your pocket).

  11. Boehm misses that this is not a trade war. It’s a war to rid China of the mercantilism it’s practiced for the last 30 years so it can be an equal, not a privileged, member of the international community. Until China puts on its big-boy trousers and lives by the rules, trade is just a chip in the battle.

    1. China has been at war with us for 25 years. I guess bending over and taking it is the preferred solution.

      It is amazing HBO Comedy writers have a much firmer grasp on the situation with China.

      There is no Free Trade when they require you to let them steal your tech

  12. We can blame the spineless Republican Party for allowing this con-man to remain in office. We see a pattern that emerges of the president as one of rash, short-sighted decision-making, without consideration of consequences, reckless, impulsive moves that are self-destructive and are characteristic of dangerous impairment.

    1. What is “self-destructive” is the mainstream fiscal and monetary policy that both Republicans and Democrats have been practicing for the purpose of crony capitalism. You’re a moron if you don’t see that.

      Trump isn’t very good at reforming this, but he is a lot better at it than any other of the available candidates would have been.

  13. China – the free market doesn’t apply. The only ways of avoiding paying the punitive import tariffs, what we can do is stop buying Chinese goods. It is important to buy American-made goods. In China “free” market means steal what you want. Americans may win concessions, whether anything we can make China stop stealing its way to the top and, stop China shamelessly pursue other criminal ploys.

    1. +1 Renmenbi

  14. Trade deals between countries are supposed to be mutually beneficial. It is clear that the American/Chinese deal is incredibly one sided. I doubt anyone one either side of the political wing will deny this.
    America imports significantly more from China than it exports This situation is not sustainable and obviously needs to change.
    Because of the trade imbalance, America is at a distinct advantage in any trade war with China. Tariffs may affect America to a degree but is having a devastating effect on the Chinese economy. China will only be able to hold out for a limited time before it has to give in and acquiesce to Trump’s demand for a fairer trade deal. I suggest everyone holds the course and understands that America are negotiating from a far stronger position than China. America holds all the cards and will end this trade war with a far better deal. It is inevitable.

  15. More than 2.1 million American jobs could be lost and the average family of four will face about $2,200 in higher annual costs,

    Stop living in economic fantasy land. With trillion dollar budget deficits and many more trillions of unfunded liabilities accruing every year, that is a laughable concern.

    The average American family will have to pay dramatically higher taxes anyway. That can be accomplished through consumption tax, income tax, and/or inflation. Of those, a consumption tax is economically the best solution, and the only consumption tax that is politically feasible is tariffs.

    So, it’s win-win: either China starts offering us more friendly trade terms, or the US will impose large consumption taxes (which happen to target primarily foreign companies).

    The idea that it is libertarian policy to not do anything about spending but keep taxes low is absurd; it’s as absurd as the crap that mainstream Democrats and Republicans are peddling.

  16. Everything that Trump wanted out of China was in the TPP and we could have transitioned to trading with friendlier nations. What a goddamn moron Trump is.

  17. you guys have no idea what’s going on. trump is trying to get access to the chinese economy for american companies, without having to give up all their technology in the process. even companies making chemical products are forced to give trade secrets to get PARTIAL access to the chinese market. companies like facebook are completely blocked, while chinese clone their product. that is the real issue, and you completely miss it because you’re focused on how you’re so much smarter than trump (spoiler alert, you’re the idiots).

    1. don’t talk reason to Reason intellectual dilettante

  18. oh course Boehm and the Cato idiot do not actually make any causal connection to their supposed superior strategic pathway and the results being any different…China basically reneged on prior WTO commitments ..why would a weaker multilateral institution perform any better?…poor Eric, go back to playing checkers

  19. when did Cato become the champion of entangling foreign commitments?…lol

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