Here’s a War We Could Win

Multinationals and some politicians like to use the scary term "trade war" to frighten us away from any thoughts of pronouncing China to be a currency manipulator and then attaching tarrifs to their exports.  Pundits everywhere like to blame the Smoot Hawley Tarrif Act of 1930 with causing the depression (this is absurd).  Apparently those chicken littles can't differentiate between a situation where our exports exceeded our imports and the current situation where imports from China massively exceed our exports!

In fact it's worse than that – most of our exports are intermediate goods that are just production components which help them to export even more to us.  As Robert Scott of the EPI puts it:

"A large share of our exports to China are intermediate products that are used to produce exports to the United States. If China raised tariffs or otherwise restricted imports of those products, it would simply raise the cost of their own exports to the United States. Furthermore, U.S. imports from China exceed our exports to that country by a ratio of more than 4 to 1. So every dollar in tariffs imposed by China would, in theory, be matched by four dollars in U.S. tariffs on their exports, if China ever tried to engage us in a trade war."

Free-trade-cartoon-1

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