Foreign Trade

Trump’s China Tariffs

3/22/18
from The Wall Street Journal,
3/22/18:

Stocks fall as markets doubt the White House has a trade strategy.

President Trump announced his long-awaited trade assault on China Thursday, and this time at least he is closer to the right target. But his decision seems unconnected to any larger trade strategy, and his main remedy of tariffs will harm American consumers and businesses as much as they will the People’s Republic. No one should be surprised by the $60 billion in border taxes on China, given that Mr. Trump campaigned on worse. He is also responding to the genuine problem of Chinese mercantilism. China’s government steals the intellectual property of U.S. companies or forces them to turn it over, and Beijing uses regulation to discriminate against foreign firms. This might have been tolerable when China was a smaller economy trying to reform, and the U.S. made a reasonable bet in 2001 when it let China enter the World Trade Organization. The gamble was that China would continue to reform, adapt to global trade norms, and eventually become a genuine market economy. That hope showed early promise but has become forlorn as President Xi Jinping has pushed “national champions” like Huawei and Tencent. Facebook still can’t operate in China, and Tesla is punished with a 25% tariff on imported electric cars. The U.S. tariff on cars from China is 2.5%. China’s predatory behavior has eroded political support in the West for the very free-trade rules that have lifted hundreds of millions of Chinese out of poverty.

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