The problem with the trade war argument

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I’ve heard many free-traders question the wisdom of President Trump’s tariffs against China. They argue that free trade benefits everyone and that tariffs elicit responses that can trigger a trade war. I don’t need to be convinced that their arguments are 100% correct as far as they go, but they make 3 questionable assumptions.

  1. They assume that US tariffs would be the “first salvo” in a trade war, but this is not the case. I don’t agree entirely with President Trump’s public assessment of the trade situation, but trade salvos have been launched at the US for some time. Currency manipulation, intellectual property rights, requirements that US firms must secure joint ventures with domestic firms to enter the market, and competition from state-owned enterprises are but 4 examples from China. In this respect, the tariffs announced today could be viewed as a much-delayed response to unfair practices instituted years ago.
  2. They assume that all nations share an equal commitment to free trade. In an ideal world, leaders in each country would be equally committed to open exchange, not just in talk, but also in practice. While we should work to reach this ideal, we must equally recognize that it’s not reality. Like it or not, governments don’t just get out of the way and let companies trade.
  3. They assume that a “somewhat free” trade arrangement is acceptable, and certainly better than tariffs and other government restrictions. But the US has overlooked real trade problems for years in the interest of short-term corporate gains. This assumption is not valid in the long run. It’s akin to appeasing a brutal dictator. You get might get “peace” for a while, but your long-term position is compromised.

All nations benefit from free trade, and it’s my hope that all nations will come to the table to discuss the removal of barriers that protect their firms and punish outsiders. But we need action. I expect my leaders to be open to compromise, but insistent on results. I’m willing to accept some international blowback from other nations if that’s what it takes to get real progress.

5 Comments

5 Comments

  1. wtc82  •  Mar 23, 2018 @6:40 AM

    I would not never have voted for Trump if I thought he’d get us in a trade war. Tariffs are bad for business. Just look at the stock market.

  2. darrell  •  Mar 23, 2018 @7:54 AM

    I wouldn’t have voted for Pres. Trump if I thought he wouldn’t negotiate tough with the Chinese.

  3. Dwight_  •  Mar 23, 2018 @3:49 PM

    just look at what the market is doing. I don’t think we have the stomach for a trade war.

  4. Thomas6  •  Mar 24, 2018 @7:49 AM

    There are 2 arguments, one about free trade and one about when to fight for fairness. We all agree about free trade but this is the time to fight for fairness. Let’s get behind the President.

  5. victor.r  •  Mar 25, 2018 @4:47 PM

    Trump is gambling. How can you be a libertarian and support this? We want free flow of labor, products, etc., not tariffs which are taxes.