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 Richmans' Trade and Taxes Blog

Obama's trade policy will be an issue in the coming election
Howard Richman, 4/18/2012

The failure of President Obama's trade policy is quite clear. For example, according to the latest statistics from the Commerce Department, net US exports of goods to China fell in February for the 25th consecutive month, as compared to the same month one year earlier, as shown in the graph below:

A recent Republican National Committee (RNC) campaign ad (From 'Hope' to Hypocrisy: Excuses, Excuses) points to Obama's manufacturing job losses, without mentioning that his predecessor, Republican President Bush, had just as dismal a record.

Republican candidate Mitt Romney plans to take a tougher line with China than either of his predecessors. In the February 16 Wall Street Journal (How I'll respond to China's Rising Power), he wrote:

In the economic arena, we must directly counter abusive Chinese practices in the areas of trade, intellectual property, and currency valuation. While I am prepared to work with Chinese leaders to ensure that our countries both benefit from trade, I will not continue an economic relationship that rewards China's cheating and penalizes American companies and workers.

Unless China changes its ways, on day one of my presidency I will designate it a currency manipulator and take appropriate counteraction. A trade war with China is the last thing I want, but I cannot tolerate our current trade surrender.

President Obama does not need to continue his failing policy. When President Nixon was faced with an overall trade deficit, he imposed a 10% across-the-board tariff on August 15, 1971, which balanced trade by 1973. (He took advantage of a special WTO rule, then a GATT Rule, which lets trade deficit countries impose trade-balancing duties or import restrictions.) President Obama could win the trade issue in the coming election by imposing the scaled tariff to balance trade.