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Richmans' Trade and Taxes Blog
In one of National Review’s hit pieces against Republican presidential frontrunner Donald Trump (What Trump Doesn’t Understand – It’s a lot about our Trade with China), correspondent Kevin D. Williamson called Trump a “dangerous buffoon” because he would threaten tariffs upon China’s products, and thus risk a trade war with China. But it’s not Trump that is the buffoon on trade; it is the National Review!
Trump plans to take on the huge U.S. trade deficit with the world, and especially with China. He threatens to place upon Chinese products a tariff that is like the 45% tariff that China recently placed upon some U.S. cars. Such a threat could lead to negotiations between the U.S. and China about balancing trade, and Trump wrote the book on negotiations.
When an article tears into a candidate for having his facts wrong, the magazine that prints it probably should check to make sure that the candidate is actually wrong. But National Review failed to fact-check this piece. Its correspondent Kevin D. Williamson wrote:
But Chinese tariffs on big-engine American-made cars were in addition to China’s already existing 25% tariff on all U.S.-made vehicles. The Guardian, a British newspaper, got it right when the new tariff was announced. It reported on December 14, 2011:
Let’s add up the numbers. China’s base tariff on American vehicles is 25%. In 2011 it announced that it would add an extra 22% on some cars. If you add 22% to 25%, the total is 47%, which is much closer to the 45% that Trump stated than to the 12.9% claimed by the National Review.
The U.S.-China Trade Relationship
The unwritten rule of U.S.-China trade is simple. The U.S. buys Chinese products, but China won’t buy American products unless they can’t be produced in China. As a result, the U.S. trade deficit (goods and services) with China has been growing, ever since President Bill Clinton gave China “most favored-nation” status and WTO membership in 2001, in return for reductions in China’s tariff rates.
During the year from October 2014 to September 2015, as shown by the right-most line in the graph below, the U.S. trade deficit with China was a record $338 billion:
To read the rest, go to:
Comment by Bruce Bishop, 1/26/2016:
I have read, more than once, that a Jeep Cherokee, which sells for $27,000 here, costs $85,000 in China.
It was alleged, but ignored by the mainstream media, that the Clinton presidential campaign was funded, in part, by Communist China.
Journal of Economic Literature:
Atlantic Economic Journal: