May 7, 2019

Increased Tariffs on Chinese Goods

We're officially on Insta! Did I throw on a blazer at 5 am for all you lovely people? You bet I did!

“Accusing Beijing of ‘reneging’ on commitments it made in earlier talks, the nation’s top trade negotiator said Monday that the Trump administration will increase tariffs on $200 billion in Chinese goods.” AP News

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From the Left

The left criticizes the tariffs for hurting US consumers, and worries about an escalating trade war.

“According to a paper published [in] March by economists Mary Amiti of the New York Federal Reserve Bank, Stephen J. Redding of Princeton University and David Weinstein of Columbia University, practically all of the effect of the tariffs ‘fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters’... the total cost of tariffs on importers and consumers was nearly $1.4 billion a month. In another survey, researchers at the Federal Bank of Atlanta, the University of Chicago and Stanford concluded that tariffs had led to nearly $33 billion worth of reduced investment in the U.S. in 2018 alone.”
Luke Barnes, ThinkProgress

“The real worry financial markets always have about tariffs… is not so much the tariffs themselves as what comes next. China could retaliate by cutting purchases of American agricultural goods, buying European airplanes rather than American airplanes, or trying to bias the domestic Chinese auto market against American brands. At that point, talks aimed at deescalation might get back under way. But the US could also counter-retaliate. This kind of ‘trade war’ between the world’s two largest economies could spiral out of control and end up severely damaging the global economy.…

“Trump’s aides tend to say that this is all overstated. That the basic reality is the US economy is in a strong position, that Chinese leaders’ own position is more tenuous, and that Trump is simply an aggressive negotiator playing for advantage. On the other hand, obtaining that advantage requires him to credibly act like someone who doesn’t understand — or doesn’t care about — the potential harms of a giant trade war. The problem is he’s sometimes much too convincing about it.”
Matthew Yglesias, Vox

Some note that “Trump can’t make any permanent trade agreements unless Congress agrees. That’s a long process he hasn’t even started. Instead, Trump is using executive authority, which lasts only as long as he is president. Any promise he makes to China will expire on January 20, 2021, just 21 months from now, unless he is reelected. The Chinese know this. That’s why they are in no hurry to make the kind of deals Trump wants. He might ‘encourage’ them with threats and maybe even higher tariffs. But then he risks crashing the markets. So, China’s best negotiating strategy is to wait, which they do very well.”
Patrick W. Watson, Forbes

Finally, many are criticizing the Trump administration for “[relenting] on imposing sanctions on key Chinese officials involved in carrying out human rights abuses in Xinjiang… in a bid to supposedly counter terrorism, Beijing has set up a vast system of ‘reeducation camps’ to dissuade the region’s predominantly Muslim Turkic minorities, including Uighurs, from embracing religious extremism. Advocates and Uighur exiles abroad point to a totalitarian dragnet that has disappeared a chunk of the region’s population and ushered in a draconian 21st-century surveillance state… [the failure to address this behavior is a] glaring absence in Trump’s showdown with China.”
Ishaan Tharoor, Washington Post

The political calendar and Trump's approach could give grounds for optimism. Kim, who has presided over a limited form of economic development inside North Korea, is under pressure to deliver improvements in the lives of his people… So he has an incentive to try to seek economic benefits or aid from the United States and wants punishing economic sanctions lifted — a potential opening for US negotiators… Kim must realize that his chances of basking in this kind of legitimacy with a US President other than Trump are slim. So if he fears Trump could lose in 2020, he may reason the time may be ripe for a deal. And Trump wants nothing more than a big diplomatic breakthrough months before the election.”
Stephen Collinson, CNN

Regarding the Cadillac tax, “high-premium employer-based plans raise the cost of health care for everyone by encouraging the overconsumption of expensive services. This means that even Medicare and Medicaid face higher prices. Quite aside from its benefits for the health-care market, the Cadillac tax would also have the effect of expanding the tax base and making the tax code more efficient. It would raise revenues by about $15 billion a year… Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success.”
Karl W. Smith, Bloomberg

“The two issues with which he is most often associated, support for a balanced budget and opposition to free trade, put him at odds with both of our major political parties. An old-fashioned, soft-spoken Southerner, he nevertheless held views on so-called ‘social issues’ that would be to the left of the mainstream of the Republican Party, both then and now. He was a fervent supporter of the Vietnam POW/MIA movement in the late '80s and early '90s, but he was not in any sense a hawk. Never mind 2003. Perot opposed the first war in Iraq in 1990… Perot's death should be mourned by all Americans who regret the fact that it is no longer possible to make reasoned, non-ideological arguments about questions of public import, and by the devolution of our political life into mindless partisan squabbling.”
Matthew Walther, The Week

From the Right

The right is critical of China’s trade practices, and supportive of Trump’s tough negotiating tactics.

From the Right

The right is critical of China’s trade practices, and supportive of Trump’s tough negotiating tactics.

Beijing has too often violated the global trading rules it agreed to and profits from. It steals trade secrets and intellectual property and handicaps foreign companies with punitive regulation. Chinese abuses have undermined political support for free trade in the U.S… There’s no denying that [Trump’s] border taxes on Chinese goods have prodded Beijing to negotiate, though tariffs have also imposed costs on U.S. consumers and producers, especially in agriculture...

“Mr. Xi has to concede more than Mr. Trump does—without being embarrassed in the process. China already has largely free access to the U.S. market and rule of law. China’s main demand is that Mr. Trump lift his tariffs, which is reasonable if China agrees to cease its multiple trade violations. This includes protections for IP, a reduction in tariff rates toward U.S. levels, a reduction in subsidies for state-owned companies, more liberal rules for joint ventures, and an end to cyber theft.”
Editorial Board, Wall Street Journal

“The president’s tough line now—heading into the final stretch of negotiations—will reduce friction later. China is less likely to cheat on any future agreement if it needs to comply to earn a reduction of these tariffs. China will cheat if the U.S. has no tariffs to enforce it… China has a long history of quickly breaking promises to the West. From refusing to abide by the rules of the World Trade Organization after it joined in 2001 to abandoning President Xi Jinping’s promise to President Obama not to militarize the South China Sea, Beijing’s record makes strong enforcement mechanisms a necessary precondition to any U.S. agreement to a deal.”
Michael Pillsbury, Wall Street Journal

Trump’s “policy is right on the mark here. Chinese President Xi Jinping intends to destroy the U.S.-led international system of fair commerce under the democratic rule of law. He aims to replace it with one of intellectual theft and feudal mercantilism. China is playing games in the trade negotiations to protect that agenda. But Trump's tariffs and other economic actions challenge Xi by jabbing at his unelected regime's economic vulnerability.”
Tom Rogan, Washington Examiner

“The trade war is, to a large extent, a conflict over the Chinese Communist Party’s most important means of keeping itself in power: subsidies and the state sector… significantly changing China’s trade practices would mean forcing the Chinese Communist Party to upend a core piece of what is holding its fragile political system together… [But] from the American perspective, the costs of living with these trade practices are far too high to justify perpetuating an unreformed trade relationship with China…

“If the United States is determined to no longer bear the painful consequences of China’s trade practices, it can either get Beijing to significantly reform its economy—extremely unlikely given the nature of Chinese politics today—or it can decide to curtail the trade relationship… sooner or later, American policymakers will have to face this reality and the uncomfortable implications of it.”
Nick Taber, The American Conservative

“Not only did [Trump] attack the ‘squad,’ he managed to do it in a way in which no other prominent Democrat can continue to criticize them publicly, lest they be perceived as echoing the president’s contention that they should go back where they came from. At the exact moment the accusations and counter-accusations were set to do lasting damage, Trump just had to jump in and give them an attack that would unify them all. It often seems like Trump would rather have a bad news cycle that focuses on him than a beneficial news cycle that focuses on someone else… Everyone around the president can read a poll and knows that his rage-tweeting is a liability; it is perhaps the biggest liability in a presidency that, with prosperity and a perception of peace, ought to be comfortably cruising to reelection.”
Jim Geraghty, National Review

“If Joe Biden can win his way through the primaries, he’s almost lab-engineered to beat Trump. He doesn’t cause Republican panic, he has the potential to connect with white working-class voters in a way that Hillary couldn’t in 2016, and he has a potential to connect better with black voters than Hillary did… if Biden emerges from [this] crucible, Trump will face a very different challenge than he faced in 2016.”
David French, National Review

“NBC and MSNBC embraced Sen. Elizabeth Warren of Massachusetts in the first debate of Democratic presidential candidates Wednesday night, treating her like the star of the show. The debate led off with Warren, who had a huge popularity advantage from the start… NBC anchor Savannah Guthrie started it off sounding more like Warren’s press secretary. ‘You have many plans – free college, free child care, government health care, cancelation of student debt, new taxes, new regulations, the breakup of major corporations,’ Guthrie said, before teeing up an economy question. Guthrie even used Warren’s plan to break up tech companies as the foundation for a question for Sen. Cory Booker of New Jersey… the round-robin final comments also ended with Warren, as Maddow asked her for the ‘final, final statement.’ That let NBC bookend the entire debate with Warren and Warren.”
Dan Gainor, Fox News

President Trump should be happy. As much as Warren is articulate, obviously intelligent, and energetically supported by Democrats, she would also be far easier to defeat than Joe Biden… Considering Trump's economy, the president is well placed to defeat Warren.”
Tom Rogan, Washington Examiner

A libertarian's take

“The fans who avidly followed the men’s tournament certainly weren’t doing anything wrong. And it’s hard to argue that each of them had a moral obligation to be exactly as interested in women’s soccer. Even if we could stop them from watching the men more than the women, should we?…

“It’s tempting to answer that the fan choices aren’t innocent, they’re sexist. But since we can’t peek into their hearts, to say that definitively, we’d have to assume that men’s greater speed, strength and endurance definitely make nodifference to the sport’s quality. Fair enough, but then why do fans prefer to watch Megan Rapinoe play instead of the sedentary elderly who could presumably use some exercise? Alternatively, maybe pay should be equalized precisely because biology is unfair. But that seems to be an argument for curbing the pay of all top-level athletes, who have to hit the genetic lottery just to get on the field. It might be easier to focus on the distributions across society at large, rather than every individual industry, especially when fundamental biology is in play.”
Megan McArdle, Washington Post

On the bright side...

Artificial Intelligence creates never-ending death metal.
Science Focus

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