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 Richmans' Trade and Taxes Blog

Politics and the Trade War
Jesse Richman, 5/27/2019

Samuel Rines has a good piece on the broader political moment of which the trade war is only a part. It misses two or three things though.  First, China's rise was facilitated by the US failure to counter it's mercantilism until it was much too late.  Second, the state capitalism model has many anticedants. Finally, the challenge of global economy versus state regulations needs more attention.



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Regulation to Address Undervalued Currencies
Jesse Richman, 5/24/2019

The Trump administration appears to  be moving forward with regulations that will allow the Commerce Department to impose countervailing duties against countries found to have undervalued currencies.  Currency manipulation and undervaluation have long been a prime tactic of mercantilists, and so this regulation is a welcome move that will expand the capacity of U.S. companies to respond to subsidized competition from abroad.  A comment period is now open on the proposed regulations. 

Under the regulations, the Commerce Department in conjunction with the Treasury Department will determine whether the currency has been undervalued.  Specifically:

"We will seek and to defer to the Department of the Treasury’s (Treasury’s) evaluation and conclusion as
to whether government action on the exchange rate has resulted in currency undervaluation,
unless we have good reason to believe otherwise, based on the record as a whole, in which case
we will provide Treasury an opportunity to review and rebut the contrary reasoning....


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Trump's China Tariffs will Succeed -- we're published in today's American Thinker
Howard Richman, 5/15/2019

Here's how we begin:

For the last four decades, the United States has often engaged in trading away its future by running up debt and selling assets instead of products. This brought about the stagnant living standards and incomes experienced by the U.S. middle class during the presidencies preceding Trump.

The countries with which the U.S. had the largest trade deficits (goods and services) in 2018 were:

  1. China - $379 billion
  2. Mexico - $78 billion
  3. Germany - $67 billion
  4. Japan - $58 billion

These countries accounted for 93% of the total, with China, by itself, accounting for 61% of the U.S. trade deficit. Donald Trump was elected by the people who have borne the brunt of this policy failure, with a mandate to fix it.

On Friday, President Donald Trump took a huge step toward doing just that. He raised the U.S. tariff rate from 10% to 25% on $200 billion per year worth of Chinese goods that were being imported into the United States. Back in July, when Trump had initially imposed the 10% tariffs on Chinese imports, China responded by imposing tariffs on $110 billion of U.S. exports to China.

Trump also threatened to place tariffs on the other Chinese goods being imported each year into the United States. This gives the U.S. leverage that China can’t match. As a result of its mercantilist strategy, China exported $540 billion worth of goods to the U.S. but only let $121 billion worth of U.S. goods into China in 2018. (Mercantilism is the “beggar-thy-neighbor” economic strategy of maximizing exports and minimizing imports in order to grow at one’s trading partners’ expense.)...

To read the rest, go to:


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Bring on the Trade War -- Why the US must, can, and will win a more balanced trading relationship with China
Jesse Richman, 5/8/2019

The liberal trade world that was built after World War II is on the verge of collapse.  And the only politician who can save it is Donald Trump.  And the only way to save it is to win the trade war with China. 

Donald Trump was elected president in part because he recognized the bankruptcy of US trade policy and promised to do something about it.  As negotiations with China enter a difficult and vital phase, America is very lucky to have a president with the gumption and determination to see this fight through.  The trade war with China is one that the US must, can, and will win.  And when it comes to the tariffs proposed so far, the US has not yet begun to fight. China should change course, stop reneging on its negotiated promises, and become a normal capitalist nation.  But if China prefers to remain mercantilist, totalitarian, autocratic, illiberal, and despotic, the US must treat it as it deserves -- to a healthy course of isolation, disinvestment, and containment. 

For decades the United States has been played for a sucker by China's totalitarian masters... 


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Tariffs Raise Costs on Dryers (Without Dryers Being Taxed?!?)
Jesse Richman, 5/6/2019

A few weeks ago a working paper by Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot got a great deal of attention.  The headline treatment in many publications was along the lines Mark Perry at AEI gave it: "Trump’s washing machine tariffs created 1,800 US jobs, but at a YUGE cost to consumers of $820,000/job." The Washington Examiner opined that this study showed "Why protectionism fails."

But there are some strange things going on in the analysis of the paper.  The authors acknowledge one such flaw in the abstract when they write: "We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount."  

Come again?  Let's lay this out for a moment and pause to think about it objectively.   

The evidence:

1. Tariffs were placed on washers.  Washer prices went up by about 12 percent. 

2. Tariffs were NOT placed on dryers.  Dryer prices went up by about 12 percent. 

Now let's apply some basic logical reasoning.  Mill's method of agreement implies that if a cause produced an effect, then the cause must be present in both cases.  Clearly the effect happened in both cases but the tariff was applied in only one case.  Hence, the tariff cannot have caused the increase in price of the goods... 


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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]