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Navarro WSJ Opinion Piece on Trump Tariffs on China
Jesse Richman, 6/26/2018

Peter Navarro has an excellent opinion piece in the Wall Street Journal defending the Trump tariffs on China.  He concludes:

It has taken vision and courage for the president to take these steps. The far easier course would be to continue the relationship with China as his predecessors did. If China continues to escalate this trade dispute rather than treat the U.S. fairly, Americans may finally wake up to an economic and national-security threat that the president has seen coming for decades. With its huge trade surplus with the U.S., China must know it has far more to lose in this trade dispute.

The president won’t back down when America’s economic prosperity and national security are at stake. This is no time for miscalculation by China—and past time for China to end its economic aggression.

The entire piece is worth a read. 


Comments: 0

How to Avoid Trade Wars While Balancing Trade
Raymond Richman, 6/25/2018

Trade agreements are excellent examples of crony capitalism. If one party to a trade agreement imposes a tariff on the products of an industry it favors, it is simple enough for an affected country to do likewise, initiating a trade war.  Even if the initiating country had good reasons for imposing a tariff or other barrier to  trade, other parties to the agreement may object because it violates the letter of the agreement. When the Trump administration imposed a tariff on steel and aluminum products on the grounds that the two industries are critical to its defense, China immediately imposed a tariff on USA agricultural products, a sector favored by the USA in trade negotiations. Canada and the European Union announced they would impose tariffs on USA goods in retaliation to the USA tariff.  

Trade agreements usually provide some relief for a member experiencing chronic trade deficits. One that is generally acceptable is a devaluation of its currency. A devaluation means that the prices of imported goods will rise and the prices of exported goods will fall in terms of foreign currencies. As a result, the country may import less and export more. The trouble is that a currency devaluation would affect countries with which the devaluing country has a trade surplus. If a country has a chronic trade deficit with one or a few countries, one would like the devaluation to affect only them.


Why a tariff on steel and aluminum would cause a trade war by countries enjoying enormous trade surpluses—in effect growing at the expense of the USA—is surprising. It is the USA that should start a trade war with China, the European Union, and Japan. That is decades overdue! ...


Comments: 0

How to Avoid Trade Wars While Balancing Trade
Raymond Richman, 6/5/2018

It is scandalous the way our media, including the Wall Street Journal, are reporting the world’s reaction to the Trump administration’s imposition of a tariff on steel and aluminum. Since 1975, America’s trading partners, with few exceptions, have enjoyed a surplus in their trade with the USA that has cost American manufacturing workers millions of jobs, caused a relative decline in manufacturing in the USA, and converted the USA from the world’s leading creditor nation to the world’s leading debtor nation. They have all been accusing the Trump administration of starting a trade war when in fact it could be argued that the trade agreements promoted by the USA were suicidal.

Trade Wars are predictable when a country chooses to impose tariffs on or more of a select group of products. It is easy for its trading partners to do likewise. A trade war is rare when a country devalues its currency which is equivalent to a cross-the-board tariff on imports.

The six other members of the G7, Germany, Japan, France, Canada, Italy, and the United Kingdom condemned the USA action. None of the media mentioned the fact that for decades these countries have been waging a trade war on the USA. In 2016, the countries with which the USA had the largest trade deficits, were China, $347.0 billion; the European Union, $146.3, (including Germany, $64.8 billion); Japan, $68.9 billion; Mexico, $63.1 billion; Ireland, $35.9 billion; and S. Korea, $27.7 billion. Only S Korea has agreed to reduce its deficit by increasing imports from the USA. The total trade deficit of the U.S. in 2016 was $734.3 billion. These countries account for 93.8 percent of the total. The reader should note that three of the six G7 countries are included.  How could the media accuse the USA of starting a trade war given the fact that it has suffered trade deficits for decades? ...



Comments: 0

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]