May 16, 2019

Trade War With China

Editor's note: We couldn’t be more proud of one of our teammates, Isaac Rose-Berman, who penned his first op-ed this week in USA Today: “How college students can bridge American divides: 'Study abroad' in Alabama or New York.” Please give it a read, and share far and wide!

China said on Monday it would impose higher tariffs on most U.S. imports on a revised $60 billion target list, hitting back at a tariff hike by Washington on $200 billion of Chinese goods in a further escalation of a bitter trade war.” Reuters

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From the Left

The left criticizes Trump’s tactics and is pessimistic about a favorable resolution.

“To make the case for his trade war, and to measure his administration’s success in it, Trump is relying on blatant falsehoods and misconceptions… In his mercantilist, protectionist understanding of the world, trade wars are good, tariffs are a way of hitting the bad guy, and whatever the United States is doing on trade, it is winning. Alas, here in the real world, Trump’s trade war means that consumer goods are about to get more expensive and certain exporting businesses are about to face a much tougher climate, all thanks to the White House.”
Annie Lowrey, The Atlantic

“The scale of the overall harm here is pretty modest… For every consumer sad about higher prices, there’s a producer who’s excited about them. And for every producer who’s sad about lower prices, there’s a consumer who’s happy. And most of all, the dividing line between who wins and who loses on any given round of tariffs and counter-tariffs has relatively little to do with whether you’re Chinese or American and a lot to do with what your specific role in the global economy is… The problem is it’s a bit hard to say what Trump is trying to achieve here

“America’s official list of demands contains a bunch of items that are somewhat in tension with each other… In an actual negotiation, you tend to need to settle for half a loaf, and it makes a difference which half you really want. There’s one scenario in which the US and China settle on some handshake deals to narrow the trade deficit via larger Chinese purchases of US agricultural commodities. And there’s another scenario in which the US really drives hard to get China to ease up on technology acquisition… nobody is exactly sure… [how this] will end.”
Matthew Yglesias, Vox

“Both the United States and China seem to be digging into their positions in ways that will be hard to resolve with the mutual face-saving that typically turns high-stakes negotiations into deals… The United States is demanding that China codify rules into law to protect American companies (and their technology) that do business in China. Chinese negotiators now reject that possibility…

“‘It looks like there was a level of specificity that China wasn’t willing to accept and a level of ambiguity that the Trump administration wasn’t willing to accept’... Given where things stand, it may take… [a] reset between [the] two top leaders, built on personal relationships, rather than the slow grind of hammering out an agreement that is more typical of economic diplomacy.”
Neil Irwin, New York Times

Some note that “the market sensitivity to threats and counter-threats in the trade war is quite remarkable… When it appears less likely that a conflict over well-defined and ultimately not-that-difficult commercial issues can be resolved, rational observers conclude that it is also less likely the United States and China can manage issues ranging from 5G wireless technology to North Korea, from the future of Taiwan to global climate change, and from the management of globalization to the security architecture of the Pacific region…

“This carries with it an important lesson for both sides: It is risky to turn the pursuit of even vital national objectives into an existential crusade. Rather, even when nations have objectives that are in conflict, it is important to seek compromise, to avoid inflammatory rhetoric and to confine rather than enlarge the areas where demands are being made. Establishing credibility that promises will be kept and surprises will be avoided is as or more important with adversaries as with friends.”
Lawrence H. Summers, Washington Post

“What Trump should do about China, and what Democrats should advocate, is improve relations with democratic European allies. Stop undermining the European Union. Stop dividing NATO. Stop waging tariff wars. Work with democratic allies in Europe, Asia and around the world to present a united and powerful front to meet the challenge from China without policies that could crash financial markets, create the next deep recession or trigger the next global financial crisis.”
Brent Budowsky, The Hill

Many note that “Biden’s opposition to [marijuana] legalization… puts him at odds with the great majority of Democrats, 75-plus percent of whom back legalization. Biden’s opposition even puts him at odds with the median Republican, with polls showing that even a majority of Republicans support legalization. Politically, then, legalization should be low-hanging fruit… Yet Biden is not quite there… It’s an especially bad look for Biden. He has a long record of pushing for punitive criminal justice and drug policies — not just supporting but actually writing many of the laws in the 1980s and ’90s that helped shape America’s modern war on drugs. For Biden to hang on to marijuana prohibition, then, just reinforces one of the major concerns that criminal justice reformers like Booker have about him.”
German Lopez, Vox

Others argue that “Biden was almost the only one on the stage who talked like a normal person. There was a point near the end of the debate when he was talking about getting men involved in stopping domestic violence and he said that we need to keep ‘punching’ at it… I knew that the twitterati and the analysts would tut tut. Ol’ Joe is just out of touch! He doesn’t know you can’t use words like that. Meanwhile, every non-political junkie watching the debate thought there was nothing wrong with this. Biden was just using ordinary language, not worrying too much if it was fully approved by the woke brigade.”
Kevin Drum, Mother Jones

From the Right

The right generally believes Trump’s tactics are necessary due to China’s misbehavior on trade.

From the Right

The right generally believes Trump’s tactics are necessary due to China’s misbehavior on trade.

“Those who suggest Trump started this trade war with China have it backward. Beijing has been waging economic warfare on the United States for years -- stealing our intellectual property, forcing our companies to transfer technology as a price of doing business in China and subsidizing state-owned enterprises to prevent U.S. businesses from competing in dozens of sectors of the Chinese economy. The difference now is Chinese leaders are facing a president who is willing to fight back… [Last week] should have been a wake-up call for Beijing. When Chuck Schumer is tweeting support for Donald Trump, it's time to cut a deal.”
Marc Thiessen, Fox News

The president isn’t playing protectionist here. He’s pushing a single player who needs to be confronted, a cheater and a bully. For decades, China has gotten away with theft of others’ production techniques and other intellectual property, along with technology transfers and mistreatment of US companies. Moreover, it uses its ill-gotten gains to boost its military, adding another threat… Short-term, US consumers will pay a bit more — on goods that make up less than 2 percent of the nation’s $20.5 trillion economy. But China is at growing risk of losing access to the world’s top market, because Americans can buy from other lower-wage producers if Beijing doesn’t blink… Trump didn’t start this trade war, but he’s well positioned to win it.”
Editorial Board, New York Post

“We've got to suck it up. Indeed, we must be bold here. Chinese President Xi Jinping's tariffs escalation reflects his bet that he can spike U.S. domestic fears over the economy, and a corresponding popular pressure on Trump to back down… if we stand firm, Xi will have to back down because China's economy is already weakened by foreign investor doubts, caught between rural poverty and urban wealth, and vulnerable to low-cost labor competition from the region.”
Tom Rogan, Washington Examiner

Critics note that while “a deal that opens up trade would be useful…  the U.S. needs a multifront strategy and continuing engagement with China, not a single transaction.”
Robert B. Zoellick, Wall Street Journal

“Even the United States is not large enough and powerful enough to fight the entire world at once. The global trading economy did not arise overnight, and it will not be reformed overnight. Chinese authoritarian expansion poses a unique and genuine national security threat to the United States and the entire free world. Trump should think strategically, make friends and strike favorable deals with our allies quickly in exchange for their cooperation in our battle with China.”
Henry Olsen, Washington Post

Minority view: Tariffs and any other government trade interference are a denial of freedom, the fundamental reason that our nation was formed and the protection of which is the reason for having a government in the first place. Individuals in our free society are otherwise empowered by their government to pursue happiness by contracting voluntarily with other people, no matter where they may reside, who offer their legal goods and services for trade in American markets. Any government interference with such voluntarily arranged contracts is a denial of freedom.”
Bruce Yandle, Washington Examiner

Counterpoint: “after the War of 1812, President Madison… enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked. Tariffs [also] financed Mr. Lincoln’s War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer ‘has no right or claim to equality with our own… He pays no taxes. He performs no civil duties’… [A tariff’s] purpose is not just to raise revenue but to make a nation economically independent of others, and to bring its citizens to rely upon each other rather than foreign entities.”
Patrick J. Buchanan, The American Conservative

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

“In my numerous visits to China, I’ve found that the Chinese think of themselves as much more vulnerable than Americans to a trade war. I think they are basically correct, mostly because China is a much poorer country with more fragile political institutions… Next time you hear that the costs of the trade war are simply being borne by Americans, be suspicious. In their zeal to make Trump lookcompletely wrong, on tariffs or other issues, too many commentators pick and choose their arguments. A more fair and complete economic analysis indicates that China is also a big loser from a trade war. Trump’s threats are exerting some very real pressure on the country.”
Tyler Cowen, Bloomberg

On the bright side...

Burger King wheels Whoppers to LA drivers stuck in traffic, begins Impossible [Whopper] roll out.
The Spoon

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