November 28, 2020

Gen Z Conservative

The thoughts of a young conservative on political issues relevant to all ages

is the trade war succeeding?

Is the Trade war Succeeding or Failing

Introduction:

When President Donald Trump was elected, most Americans understood he had a few policy objectives in mind. Tax cuts. Ending the interventionist era. Building a border wall to help limit illegal immigration. However, one of his most important and controversial objectives was a trade war with China. Now that we’ve had a few years of the Trump Presidency, it’s time to ask, is the trade war succeeding?

A recent article in Reason attempts to answer just that question. Conservatives have been split between their desire to reign in the Chinese dragon through Trump’s tariffs, and the desire to have free trade that has existed since Adam Smith’s The Wealth of Nations. This article‘s author, Eric Boehm, definitely falls more on the free trade side of things. So, check out the outtakes below and try and answer the question for yourself. Is the trade war succeeding?




Is the Trade War Succeeding for Trump and America?

First, on the decline in the America trade deficit, which is one of President Trump’s main talking points when discussing whether the trade war is succeeding or failing:

Through the first three quarters of 2019, the United States’ trade deficit has increased by about 5 percent over the same nine months last year, according to new data released Tuesday. That’s despite promises from the Trump administration that hiking tariffs and fighting a trade war with China would reduce the trade deficit, which is the gap between the value of goods America imports and exports.

From: Is the Trade War Succeeding?

Next, on how the trade war is hurting American businesses by reducing American exports, which was not what Trump intended when he launched the trade war and is not what most Americans want:

Indeed, the tariffs and trade war don’t seem to be doing much to reduce Americans’ demand for imported goods—though consumers and businesses are being forced to pay higher taxes on imports from China because of Trump’s trade policies. While it has failed to reduce American demand for foreign goods, Trump’s trade war has managed to reduce how much America exports. This is the opposite result Trump was supposedly seeking. Instead of boosting American industries by cutting off foreign competition, the trade war seems to be undercutting American businesses’ ability to sell goods abroad.

From: Is the Trade War Succeeding?

Then, the one bright spot; the trade war is hurting China, which is a major competitor of the United States and needs to be defeated by any means necessary, even a destructive trade war:

The trade war has slowed the flow of goods in the other direction as well. There has been a 25 percent decline in U.S. imports of tariffed Chinese goods during the first half of 2019

From: Is the Trade War Succeeding?

Finally, on the big problem with the trade war, which is that, while it may be hurting China, it is also hurting Americans and American businesses:

The bigger problems, for Trump and for the American economy, are all those other data points showing that the trade war is reducing exports and domestic business investment, while also dragging down economic growth.

From: Is the Trade War Succeeding?




Conclusion

So, is the trade war succeeding? Well, it is causing China a good bit of economic pain. Probably more economic pain than the US is experiencing. So, in that respect, you could say that America is winning the trade war.

But the problem with trade wars is that they limit economic growth for us too. Just read any book on capitalist theory. Capitalism and Freedom, The Road to Serfdom, and The Wealth of Nations all make it quite clear that capitalism can only deliver all it promises if free trade exists.

I support Trump. So far, he has done a far job than most and has delivered on most, if not all, of his campaign promises. However, I don’t think he fully understands the economics behind the trade war.

is the trade war succeeding or failing?
Is the trade war succeeding or failing? The economic results are mixed. From: The Economist

Yes, it’s necessary to reign in China. But there are better ways to do that than broad tariffs across many classes of consumer and industrial goods. Those just raise prices for American consumers, even if the real scale of Trump’s tariffs isn’t that large.

Instead of focusing on tariffs, President Trump should sanction truly dangerous or law-breaking Chinese companies and build up new trade deals with other nations that compete with China so that those goods are cheaper than Chinese goods because of free trade rather than because of punitive tariffs. In other words, he should listen to the advice of conservative experts on the pillars of prosperity and read The Free Market Revolution to understand how unleashing capitalism can help America can beat China. That would be beneficial to most everyone and would help combat China, which is a crucial foreign policy goal in our new Cold War with China.

We need to defeat China, as it is an evil nation and a major competitor for the US. In fact, it is likely the largest and most dangerous competitor we currently face and is only overshadowed by the USSR during the darkest days of the Cold War.

So, that must be remembered when considering the “is the trade war succeeding?” question. The evil and dangerous nature of China is certainly important.

But, we must also look at the efficacy of our programs and ways of fighting China. We must ask whether those programs and policies are successful or wrongheaded. And in the case of the trade war, the evidence is decidedly mixed. It is hurting China, which makes it successful in that regard, but is also hurting Americans, which makes it unsuccessful in that other regard.

By: Gen Z Conservative


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