I believe we have been in a trade war with China for 20 years. They have been fighting every day and gaining ground. We have been acting like Stalin at the beginning of Operation Barbarossa – mired in disbelief and incompetence. It was so much easier to think China was just giving us what we wanted (cheap consumer goods) without any cost to our own economy or security.
Thanks to Trump many more Americans and even economists are recognizing that we have been taken for a ride. There are confessionals everywhere; Few who now defend China in light of such public documents as Made in China 2025. This seems to have sent Trump and his team into a sort of frenzy, attacking every country as though it’s China. He even attacked a country that we have a trade surplus with (and there aren’t many of those) – Canada!
Memo to Trump: How to Conduct a Trade War
- Set an example by attacking the leader of global trade crime – China. (Let’s give a big shout out to Marco Rubio for this bill.)
- Clearly explain why it has been singled out so others know what the new rules are.
- Attack transhipping to prevent new tariffs against China from being circumvented.
- Pick a favorite country to use as an example of good conduct – one that has a deficit with us ideally and who we can trust under any situation to deliver needed goods in case we have a (military or trade) war. Canada or England will do. Celebrate their fairness.
- We must use tariffs and subsidies in case the spinoff effects of higher prices are too costly. Some combination of the two makes sense with steel, solar panels, and LCD screens.
- Make sure critical inputs like rare earth metals and pharmaceuticals are stockpiled or brought in only from friendly sources.
- Someone call up Peter Navarro and tell him you can’t win a war without allies.
Trump is right about one thing – every country in the world has been targetting debt-loving, consumption-crazy Americans. We have been in love with policies that favor consumers over producers/workers for thirty-five years. It is a shock to wake up and be told that something you buy or use as an intermediate good in your business may go up in price. For every other country in the world, that’s a normal day. Everyone (except in America) pays extra for something, knowing they do so to grant a higher wage (or social service) to a neighbor. That’s why they accept higher tax rates and/or a VAT.
Surely Americans can see the absurd place this has gotten us – we have a (fake) unemployment rate of 3.8% and wages are barely keeping up with inflation. There are a ton of unfilled jobs out there – at Chinese wage rates! Corporate outsourcers have reset the price on domestic labor. Unless we break with the global trade parasite we shall continue to circle the drain with huge tax shortfalls and an opioid epidemic. The war has begun and we must all be drafted to pay something for our safety, our sovereignty, and higher wages. We should accumulate allies to fight with us – sing along with me: Oh Canada (… or God Save the Queen).
Let’s not continue to act like Stalin in 1941.