Trump's Trade Policy Makes No Sense

When it comes to trade, the Trump administration is guided by incoherent economic thinking.


When it comes to trade policy, President Donald Trump and his adviser Peter Navarro provide endless examples of incoherent economic thinking. They regularly claim that X is true, and then in the next breath, they assert that not-X is also correct. Let's consider two recent examples.

The first involves Navarro. Following an announcement that the administration was again ready to hit Chinese imports with a new round of tariffs, Navarro made the rounds on TV to argue that consumers should not worry because this will not affect them at all. Talking to Fox Business Network's Gerry Baker, Navarro said, "There's a lot of people who are saying, incorrectly, that somehow the American consumer is bearing the burden of these China tariffs. And it's just false." In other interviews, he went on to praise the billions of dollars raised by Uncle Sam from the tariffs.

These claims make no sense. The whole point of Trump's tariffs is to raise the prices of foreign goods to make them so unappealing to U.S. consumers that these consumers will instead buy more domestically made goods. Some of the Chinese producers of the goods could, in theory, eat the full cost of the tariffs and suffer reduced profit margins. However, in reality, importers pass a large portion of the costs of tariffs on to customers—manufacturers and households in the United States—by raising their prices. In fact, many academic studies have found that most or all of the burden of these tariffs is borne by U.S. consumers.

A 2019 study called "The Return to Protectionism" for the Quarterly Journal of Economics—written by four economists, including the chief economist of the World Bank Group—found that American consumers are the ones shouldering the nearly $69 billion in added costs imposed by the last year's tariffs on imports from China.

A Congressional Research Service report also found that tariffs imposed on global washing machine imports had jacked up prices by about 12 percent compared to January 2018, before the tariffs came into effect.

And a Peterson Institute for International Economics report found that steel and aluminum import tariffs increased the price of steel products by almost 9 percent, which will "push up costs for steel users by $5.6 billion." Since then, these costs have gone up even more.

Now multiply all of these cost increases by all the industries downstream of the many Trump tariffs, and you can better assess the damage. The bottom line is that Navarro cannot simultaneously claim that prices aren't going up and that the tariffs are working to protect American consumers.

The second example comes from Trump himself. On Aug. 6, the president tweeted that "Massive amounts of money from China and other parts of the world is pouring into the United States for reasons of safety, investment, and interest rates! … A beautiful thing to watch!" This boast is stunning because it seems like the president fails to understand that the more foreigners invest in the United States, the higher the U.S. trade deficits are—which he is openly hostile to—and the stronger the U.S. dollar is relative to other currencies like the Chinese yuan—which he also opposes.

You see, one important fact that eludes our president is that the main way for foreign investors to acquire the dollars they invest in the United States is to sell us stuff. They send us goods that we want, and in exchange, we send them dollars. The beauty of the whole system is that the dollars we send across our northern and southern borders as well as abroad come back home when foreigners purchase American exports or make investments in America. U.S. economic growth, innovation and living standards all rise when that happens. Moreover, because the United States is viewed as a great place for investments, there's a stronger demand for U.S. dollars, and that pumps up the value of the dollar.

Like Navarro, the president is trying to have his cake and eat it, too. Their incoherence—including frequent praise for phenomena that result from the economic processes they claim to hate—would be entertaining if the policy consequences weren't self-destructive trade barriers.


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  1. Oh come on! “Incoherent economic thinking” is only possible when there is actual thinking involved.

    1. Wouldn’t it be nice if we eliminated taxes and regulations to make American businesses and their products more competitive instead of imposing taxes (tariffs) upon consumers?

      1. Wouldn’t it be even nicer if we had trade partners who did not serially lie, serially cheat, and serially steal our IP? 🙂

        1. +100

        2. Wouldn’t it be even nicer if the fiction of intellectual property did not exist? Or, failing that, if the lie of China stealing us blind in the IP department were not used as moral authority for our own government to steal from us and to mind our business in the form of tariffs?

        3. It would be nice if we could have better trade partners and less taxes and regulation. Of course, Trump HAS been working on less regulation, did work on lowering taxes, but still has to deal with those (especially one in particular) trade partners.

          Ms. De Rugy is either an idiot, or fundamentally dishonest in her childish analysis. The issue with China is beyond economic policy and involves national security.

          The Chinese military for example is the silent (sometimes not so silent) partner in all companies in China. One result discovered by accident was that thousands of server motherboards had the US design changed to include a hardware back door chip embedded into the PCB substrate. The servers with these motherboards were in server farms across the US including Google and Apple, and on Navy vessels. All of these had to be replaced as a crash program.

          You cannot pretend that China is not making economic policy subservient to military strategy and have your opinions treated seriously by those with more that half a wit. All these pure libertarian complaints about the “Trump tariffs” lack seriousness because of this failure to understand the broader picture.

          1. You are the witless one, to declare that your opinion is so paramount that all others are witless.

            1. Wow…you really burned his insightful and thorough analysis with your “You’re the witless one” comeback, Mr. Keyboard Gibberish.

              Back to the kiddie table for you.

            2. In the words of Professor and Senator Daniel Patrick Moynihan “You are entitled to your own opinion, you are not entitled to your own facts”

              Bring facts to base your opinions on if you want to considered seriously.

          2. @MJB…absolutely. The “libertarian” response on this issue is so two-dimensional that it’s basically a childish opinion. China weaponizes trade to achieve harmful effects on the U.S. economy. They do this through protectionism and IP theft. We’ve let them get away with it because most of our leaders either didn’t understand why it was a problem or (in the case of Biden and the Clintons) China was paying them off.

            They’re not trading with us because they want to make life better for their people or to achieve some optimal economic outcome. They’re doing it because they want to hobble their biggest economic and military rival, and ignoring that is simply suicidal.

            1. If you don’t want to buy Chinese stuff then don’t buy it.

              The biggest lie about China is “forced technology transfers”. If you want to do business in China your fees include your intellectual property. There’s no Chinese Luca Brasi telling American businessmen “Either your patents or your brains are going to be on this contract”. American companies, in search of short term gains in the stock price, give the technology to the Chinese in order to take advantage of cheap labor and low infrastructure costs. Is it stupid in the long term? Yes, so don’t buy stock in companies that do this.

              Do the Chinese sell inferior garbage? Yes, so don’t buy it. Do they steal IP? Absolutely, but no American that buys Chinese ripoffs ever gets charged with “accepting stolen property”! If you want to end IP theft then start with the Americans who buy the knockoffs.

              De Rugy is right. Trump is incoherent and Americans are paying the cost of the tariffs. That’s all that she said. The stuff about IP theft and back doors in motherboards is separate and involves actual criminality that needs to be dealt with, but tariffs are stupid no matter who they are laid on.

              1. Disagree with you re tariffs – but you are exactly right re technology transfer. That’s just part of the cost of developing global supply chains for multinationals.

                What I actually wish would happen is that we’d separate trade data into non-arm’s length transactions (that supply chain stuff where ‘price’ is an almost arbitrary accounting fiction between two corporate subsidiaries) and arm’s length transactions. Because only the latter is really an economic issue.

              2. Is it stupid in the long term? Yes, so don’t buy stock in companies that do this.

                Until a/the socialist regime takes over or freedom wins out the long term brilliance/stupidity is unknown. Sure, you want your business to win out in a 100% free market but declaring bankruptcy because the more oppressive candidate won isn’t really a viable market strategy either.

            2. Yes at least some people get it.

          3. +1000

        4. Why do you think they steal our IP so often?…..Because we make a lot of our crap there!!!!

      2. Wouldn’t it be nice if we eliminated taxes and regulations to make American businesses and their products more competitive instead of imposing taxes (tariffs) upon consumers?

        I don’t disagree. Unfortunately, that candidate wasn’t exactly on the ballot. Nonsense trade policy is better than overtly anti-liberty trade policy.

  2. The beauty of the whole system is that the dollars we send across our northern and southern borders as well as abroad come back home when foreigners purchase American exports or make investments in America. U.S. economic growth, innovation and living standards all rise when that happens.

    Unless of course you rent housing in the places where the foreign elites decide they need a bolthole (sorry housing investment) and bid up house prices. Housing as a portfolio asset and currency hedge doesn’t actually need to be rented out and renting it out only reduces its value/liquidity as both a currency hedge and a bolthole.

    Then the only thing that happens is the rent goes up. But that’s ok. Cuz the beauty of the system is that the asset-rich still make more money than the poor lose so the US is better off. And the really poor now have a whole bunch of cheap crap from China that they can wheel around in a shopping cart from street to homeless encampment. Right deRugy?

  3. “Incoherent economic thinking”? Maybe you wouldn’t find it so incoherent if you had a very good brain like Donald Trump. He is, after all, a very stable genius. I’ll bet nobody has ever accused you of being a very stable genius, have they?

    1. Nobody has accused her of being a billionaire married to a supermodel, who got elected President the first time he tried running for elective office, either. So I’m seeing a pattern here.

      1. He tried in 2012 and went nowhere.

      2. “Nobody has accused her of being a billionaire married to a supermodel, who got elected President the first time he tried running for elective office, either. So I’m seeing a pattern here.”

        Trump inherited his life. His “billionaire” status is doubtful.

        Melanie neither is nor was a supermodel. She was an uneducated young woman with sketchy immigration status willing to marry a paunchy old bald dude in exchange for some chain migration.

        Other than that, great comment.

        1. He didn’t inherit the White House, you stupid hillbilly fuck. He won it over someone who thought she was entitled to inherit it.

          He’s one of the most driven and successful human beings on the planet. That’s how he turned several million dollars into several billion dollars while you sat in your trailer park wondering why your meth dealer won’t return your phone calls.

          1. You should learn to read a financial statement — which starts with having a reliable financial statement, you slack-jawed bigot.

            Precisely how many failed marriages, bankruptcies, infidelities, proven lies, ridiculous hairpieces, court judgments, and the like does it take to be considered “one of the most . . . successful people’ in your desolate, bigoted, can’t-keep-up backwater community, UCrawford?

            Carry on, clingers. And open wider. Your betters aren’t done with you.

    2. I’m close…I’m an unstable genius!!

  4. “You see, one important fact that eludes our president is that the main way for foreign investors to acquire the dollars they invest in the United States is to sell us stuff. They send us goods that we want, and in exchange, we send them dollars.”

    In a perfect world, this is what happens. A transparent exchange of value for value that mutually benefits both parties. Everyone wants this.

    The objective reality is different. The US now has to confront a serially lying, serially cheating, serial thieving ‘trade partner’ in the form of China. For decades, politicians turned the other cheek, along with American multinational corporations. Who paid the price? The poor bastard who got laid off while jobs were being exported. This has gone on for decades.

    We now have a POTUS who is putting a stop to this. What alternative does Reason offer? From what I see, their response has been: Lay back and enjoy the rape. The onus is on Reason to provide a workable alternative to change Red Chinese behavior. To date, we have bupkis. A lot of complaints and whining, but nothing in the way of a proposed course of action.

    That is the same problem I have with ideological purists. In their sterile world (in which no one lives), perfect adherence to ideology matters more than the bottom line result. In other words, they’re perfectly happy cleaving perfectly and tightly to an ideology while their countrymen suffer the consequence. That is wrong. It is wrong from a practical standpoint, and it is wrong from a moral standpoint.

    Do we give the thief our possessions when they enter? No. We stop them and hopefully deter others. So it is with tariffs.

    Do I like tariffs? No. But I will tell you what: I like China’s lying, cheating and stealing a hell of a lot less. That has to end.

    1. I like China’s lying, cheating and stealing a hell of a lot less.

      Then don’t buy from China.

      But don’t substitute your moral judgment for that of everyone else’s.

      1. Chem, chem, chem….Do you have a workable alternative to effect a change in Red Chinese behavior? Because if you do, I’d love to read about it. Tell Reason Readership what you think can be done to effect a change in behavior. Go on…Educate me.

        Hell I give pretty much everyone the chance to make their case. So go for it.

        I already make it a point to buy American where possible. It is not the cheapest option.

        1. Why should there be some collective obligation to change Chinese behavior?

          1. Um chem….I’m going to assume you are asking a straight-up question in earnest. But I have to tell you, I don’t have very positive feelings right now.

            The obligation of the Federal government is to protect property, among other things like life and liberty. Our American IP is our property and it is reasonable to expect the Federal government act to protect it.

            Still waiting for your workable alternative, chem. I am waiting for that education, and getting antsy about it. 😛

            1. Our property?

              No. I work in a tech heavy field. America collectively owns none of the IP. Those are owned by Phillips, GE, Siemens, Toshiba, Nuance, etc. The government does have rights to IP generated under a military or other government contract if that is specified.

              If those companies want to do business in China under contracts it is none of my business. If we are talking about theft that is another matter. There needs to be a legal system to address that just as we see all the time when Apple is sued by Samsung or whatever.

              None of that applies to taxes and tariffs. Trump is mistaken in thinking a trade deficit is a lose. I am not suggesting that trade is a fair and even playing field. It is not and that applies to both domestic and international trade. Government intervention in markets should be looked at with great suspicion from a free market libertarian point of view.

        2. “Do you have a workable alternative to effect change in Red Chinese behavior?”

          Yes, it was called the Trans Pacific Partnership. A multination trade pact that would put pressure on the Chinese to reform there trading practices.

          1. You mean the TPPA that did away with our patent protections? That TPPA?

      2. How cute! Chemjeff is pretending he has morals everyone!

    2. So what proposals do you have to bring Xi to his knees?

      1. Mauser….You have asked a fair question; I shall answer.

        There is no reason or rationale to bring anyone ‘to their knees’. That has never been the goal, from what I discern. Nor is it what I am personally inclined to do. The goal is to stop China’s serial lying, serial cheating and serial theft of our IP. The question is how to do that in a way that is maximally disruptive to China (and their economy) and minimally disruptive to the US.

        Tariffs are one component to effect a change in Red Chinese behavior. There are an array of other tools available: media (exposure of Uighur and Falun Gong concentration camps); diplomatic (isolation within Asia, EU); military (bolster Vietnam, India, Japan and Taiwan).

        There is no one thing, Mauser. It is the steady accumulation of pressure to persuade China that the cost of changing their behavior is less than the cost of their serial lying, serial cheating and serial stealing.

        1. Their treatment of the Uighur population is terrifying, especially how they use technology to monitor and track them.

          1. Mauser….What is even more terrifying is why the MSM is not widely publicizing this. If we do not expose it, it will continue – and spread. That is the lesson of history.

            1. MSM is too obsessed with Russia and Hillary losing

              1. The MSM is part of the transnational aristocratic class, most of whom are completely in China’s pocket

      2. “What proposals do you have to bring Xi to his knees”

        I have no wish to participate in your sadistic fantasy.

    3. Can you be specific about the “serial lying and cheating” that you say China is engaged in?

      1. 1) While the US played “free trade” China imposed formal tariffs and informal trade barriers to US goods.
        2) China required that US firms disclose trade secrets in order to enter the Chinese market, then routinely leaked this information to set up direct competitors.
        3) China conducts industrial espionage to steal US military technology, and the intellectual property of US companies up to and including blackmail of employees and hacking into computer systems.
        4) As I noted in an earlier post, China has begun using the fact it manufactures much of our IT equipment and/or components to embed back door access directly into the hardware. This lays the groundwork for control of everything we use IT equipment to control or operate. This is preparation for a direct attack on our infrastructure before any military action takes place and over a period of years puts the US in national security purgatory.

        This is just a fast, high-level look. Drilling into the details just goes on and on.

        1. Yup. It’s utterly horrifying how competent and effective they’ve been at inserting Trojan horses into our everyday lives, as well as our national security sector. Libertarians often mock the ineffectiveness of government, but that causes them to underestimate the danger posed by an effective snd focused government like China’s, which has a unifying goal of achieving total control.

        2. Sure just show me.

          Industry always does copying and espionage. You have any idea how many lawyers Apple, Disney or Cisco employs?

          The US is not a business nor a corporation. Government has little or no place in commerce. It does in Venezuela which has worked out well.

    4. Before this trade war, we paid only, on average 4% higher tariffs than China did with us, so the trade was pretty much even, basically FREE TRADE with them….Of course there is a Trade Imbalance, as the average American has way more money than the average Chinese citizen & so we buy way more stuff from them than they do from us…Remember too they take US Dollars for their junk & that helps keep the dollar as the Global reserve currency & they buy a ton of our bonds too…..Also, the Chinese leadership do not care about their people, so they will not make a deal & I knew it from the start…Trump should’ve left it alone…But, if he was going to go after them, he should’ve either went after them right away after he got in or waited until his 2nd term. By doing it now in the middle of his 1st term, they will just wait it out now & deal with the new US prez after he loses!

      Last time there was a global trade war & overpriced stock market, a depression was the result & that could happen now because of only 1 man: Trump!….At this point, I will take a recession over a depression, but if the economy goes down significantly, Trump is 100% TOAST!

  5. Veronique, please remember who voted this guy in: WS’s (white supremacists) and nativists who are equally incoherent about economics and politics—only because he promised those racist fools that he would protect them from the idea that rapists and drug dealers are handling their chicken and dating their daughters. And to prove how incoherent these WS’s are, just read the claptrap posted above in the comments, which can be summarized thusly: “I don’t like tariffs but I hate China more and thus I want to be lied to by the White Supremacist-in-chief about who pays the tariffs.”

    1. As a general rule, when you have to replace what the other side says with completely different words, it amounts to an admission that you don’t actually have a counter-argument to what they said.

    2. I remember when you used to be intelligent.

    3. Ref. Old Mexican-Mostly Harmless
      Does your comment mean that you think there are 60 million voting white supremacists in the country? I only know one and he doesn’t feel free to speak openly because his opinions are pretty universally derided. He also doesn’t vote. Your comment is just as inane as the garbage coming from any white supremacist.

  6. Trump at G7: US president calls for end to tariffs and trade barriers

    “No tariffs, no barriers. That’s the way it should be. And no subsidies. I even said, ‘no tariffs’,” the US president said, describing his meetings with fellow Group of Seven leaders as positive “on the need to have fair and reciprocal trade”.

    “The United States has been taken advantage of for decades and decades,” he continued, describing America as a “piggy bank that everyone keeps robbing”.

  7. “They regularly claim that X is true, and then in the next breath, they assert that not-X is also correct.”

    This is true about all politicians, not just Trump on trade.
    And, oh by the way, the tariffs are foreign policy, not economic policy.

  8. Trumps trade policy is based on the thought that if a country is waging economic war on us, we should probably return the favor. Free trade is good trade only if all sides are playing fair. China, for example, isn’t.

    Now, it may be that there are good reasons to let China cheat, but first you need to admit that they ARE cheating.

    1. Yup. It would be a huge boon to US Companies if China paid them for licensing of the IP that was stolen. Billions each year.

    2. CSP….Thank you for illuminating what I see as a core problem here. The inability (or outright refusal) to see objective reality.

      The objective reality: China serially lies, cheats and steals our IP.

    3. It’s not exactly free trade when the US subsidizes the shit out of foreign manufacturing through taxes and regulations on American labor.

      1. +10

    4. Pretty much. It’s like you get invaded, and when you send soldiers to fight back, they tell you, “You’re just making things worse, the soldiers are getting shot at, and it’s costing us a lot to supply them!”

      Sometimes you need to take a hit just to keep things from getting worse and worse.

      China has been pursuing a strategy aimed at hollowing out the industrial economies of the West, and rendering them dependent on China, so that they don’t dare oppose China in anything. And it’s been working.

      Friendly nations can afford to be interdependent. Free nations can’t afford one-way dependence on totalitarian states. It has terrifying implications outside of the bare economics of it.

      1. I would argue that China has peen pursuing a policy of ‘let’s make the peasants wealthy, maybe then they’ll stop their bellyaching’. To do that they’re cutting a lot of corners, stealing from the West, and generally acting like China. Let’s face it, the Communist regime is no worse than the Imperial Cpurt…but no better either.

        I think if it was their deliberate intention to undermine the West they would be doing it in a much more pro-active manner. And it is, they may approve of undermining the West, but it isn’t really on their radar.

        Until Trump. Trump doesn’t follow the usual playbook of ‘make nice, nice with the monstrous tyranny’. Now, maybe that will work better. Short of starting a war it can hardly work worse.

      2. +100

  9. Is there any reason to assume that maybe putting high tariffs on Chinese goods will actually encourage the Chinese to steal even more IP and technology? Even better quality at lower costs can offset the impact of the tariffs.
    Maybe, too, U.S. companies should do a better job of keeping their IP from being stolen. Do they really need all the Chinese interns (potenital spies) crawling all over their R&D labs?

    1. Perhaps we don’t need all the special immigration programs to help get all the Chinese interns here on the cheap? Oh but wait, we have to have open borders for people too … right?

    2. @Creech…part of the problem with IP theft is that companies often have to give up their IP data in order to do business in China (much like you have to give up proprietary information on your creation in order to obtain a patent). The Chinese then leak that information to competitors. It’s not just about moles (although that happens too).

    3. “Muh IP”

      It’s unwise to build economic policy around government enforced intellectual monopoly.

      There’s no reason but US economic power for China to go along with US IP law. I expect China, and much of the world, to eventually tell us to shove our IP laws where the sun don’t shine.

      US share of global GDP has gone from 40% in 1960 to 22% today. Our ability to impose IP rent seeking isn’t going to last.

  10. “Trump’s Trade Policy Makes No Sense”

    Sticking with dying backwater communities and declining industries against all evidence makes no sense.

    Choosing quick pocket money over a decent education makes no sense.

    Remaining superstitious after age 12 or so makes no sense.

    Pining for good old days that never existed makes no sense.

    Choosing schools that teach nonsense makes no sense.

    Being a bigot makes no sense.

    A pattern emerges . . .

    1. Your pathological need to vent your hatred of Americans at least lets us know why you make the policy choices that you do.

  11. Reason: Free trade is when American workers pay payroll and income taxes, while Emperor Xi pays no tax on exports to the US.

    Adam Smith disagrees, favoring tariffs on foreign industry to offset local taxes on production:

    “It will generally be advantageous to lay some burden upon foreign industry for the encouragement of domestic industry, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the borne market to domestic industry, nor turn towards a particular employment a greater share of the stock and labour of the country, than what would naturally go to it. It would only hinder any part of what would naturally go to it from being turned away by the tax into a less natural direction, and would leave the competition between foreign and domestic industry, after the tax, as nearly as possible upon the same footing as before it.”

    1. Adam Smith was talking about tariffs that match the taxes we levy on our own goods, so that the playing field can be even. That’s not Trump’s intention.

      Trump’s tariffs are meant to make foreign goods more expensive than domestic goods, so that Americans will buy more domestic goods, reducing the trade deficit. His tariffs are also meant to make foreigners pay us money.

      “….This money will come from the massive Tariffs being paid to the United States for allowing China, and others, to do business with us. The Farmers have been “forgotten” for many years. Their time is now!” – DJT

      1. So do you think it a super smart idea to keep selling US assets for cheap imports? Another supposed expert who is giving away the sovereignty of the country for more cheap crap.

  12. Trump’s trade policies make no sense to the international trade illiterates but they do make more sense than any POTUS since Eisenhower. Trump is the very first POTUS to actually address America’s embarrassing imbalance of trade since the 1960’s and especially since the US voted to allow China into the WTA in 2001 (Owned and operated by GWB – BAD FORM!).

    {BAD FORM because America should never allow any country
    into a “FREE TRADE” organization whose citizens cannot engage
    in “FREE TRADE”. GWB told the Chinese citizens “y’all can, but you can’t”.
    He spoke to the totalitarian government, not the citizens.}

    Today, America’s economy is strong. Should products from China become more costly, America can just chose to buy other products that are not from China. Meanwhile, Apple is considering moving its production to India, a realtively good thing. Meanwhile, America has 500,000 new MANUFACTURING jobs under Trump whereas 200,000 were lost under Obama’s legacy and Obama told America that “manufacturing jobs were not coming back” . Obama’s statement was ignorant and wrong.

    The jury is very much still out on Trump’s international trade policies, but he has done more in 2.5 years about the trade deficit than all of the presidents in the past 70 years. Today, where the American economy is the strongest in the world, is totally different than Hoover’s economy or FDR inheritance.

    It is correct so say “Trump’s policy makes no sense”. All thinking people must also conclude that the jury is still out on Trump’s singularly novel experiment to fix America’s trade imbalance.

    1. Great post

  13. Ms de Rugy is a smart woman and it would be good to read a well thought out article on Trump’s tariffs. But this isn’t it. It’s just hand waving.

    These claims make no sense. The whole point of Trump’s tariffs is to raise the prices of foreign goods to make them so unappealing to U.S. consumers that these consumers will instead buy more domestically made goods. Some of the Chinese producers of the goods could, in theory, eat the full cost of the tariffs and suffer reduced profit margins.

    So the claims make perfect sense. Ms de R claims that as a matter of fact, Chinese producers do not (presumably including the effect of the Yuan devaluation) eat the full cost of the tariffs. That’s an empirical claim, not a demonstration that Mr Navarro’s claim is nonsensical. His claim is not self contradictory – Ms de R is simply claiming that the facts on the ground contradict him. She may or may not be right, but there’s no point claiming he’s making some sort of logical error.

    The bottom line is that Navarro cannot simultaneously claim that prices aren’t going up and that the tariffs are working to protect American consumers.

    Ms de R has not advanced any evidence that Mr Navarro has claimed that tariffs are working to protect American consumers. From what she quotes, he is simply arguing that American consumers are not being hurt by them. Which is perfectly consistent with a claim that prices not going up.

    In any event, while a coherent well reasoned economic argument from Ms de R would be welcome, she can’t be so naïve as to imagine that the Trump policy regarding trade with China is a simply matter of the economics of international trade. The essential point of the Trump trade policy is to coerce large American businesses to shift their supply chains out of China , so that the US economy does not support the growth of a strategic political and military rival. In a war, you don’t sell arms to the enemy, even if your microeconomic textbook says it would be profitable to do so. Likewise you do not place important parts of your own supply chain within enemy walls.

    Trump’s view that China has been at (cold) war with us for thirty years and that it is time that we noticed, is certainly challengeable, but it’s dumb to pretend that his policies toward China are simply about trade per se. He wishes China to become a less dangerous rival, either by China becoming weaker, or by China becoming less hostile. His trade policies are quite well directed towards those ends, and he still has plenty of cards up his sleeve that have nothing to do with tariffs. Such as Huawei, Chinese bank access to the international clearing system and so on.

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