I’m a free trader, and I hate tariffs — which are consumer taxes — but if ever there was a right time to impose punitive tariffs, it is now, and it is against China. President TrumpDonald John TrumpBooker backpedals after comparing Warren’s Facebook proposal to Trump Booker: ‘Thoughts and prayers’ after gun violence are ‘bullshit’ Mike Pence tells Liberty University graduates to prepare to be ‘shunned,’ ‘ridiculed’ for being a Christian MORE is on the side of the angels on this one, and this is the right moment to shut down China’s abusive trade practices forever.
Start with the basic facts: The average tariff that we imposed on China when Trump entered the White House was about 4 percent. China’s tariffs on us were about 10 percent, and, even when including the 10 percent tariff that Trump first imposed on $200 billion worth of Chinese imports in 2018, our tariffs were still lower than theirs. So the playing field is not level and is especially tilted against us given that Beijing’s non-tariff barriers in China can make it prohibitively expensive to do business there. We have an open market competing against the world’s second-largest economy whose doors are slammed shut.
Doctrinaire free traders should understand that this status quo is economically and politically untenable going forward. Trade can’t be a one-way street, and something has to give here. That means immediate reforms in China’s mercantilist economic behavior — on tariffs, on other trade barriers, on theft of intellectual property and on cyber espionage against America. We aren’t dealing with a friendly power here but with an increasingly hostile one that has become an existential threat.
Trump’s strategy is to hit its vulnerable economy hard with tariffs and strong-arm Beijing into giving American companies and products greater access to Chinese markets. There is not one demand that Trump is making of China’s President Xi Jinping that is unreasonable. The free traders should recognize that if the Trump tariffs work — and this is a dangerous game, admittedly — we will have freer trade at the end of the day.
Sure, the risk here is a ramped-up trade war that makes everyone poorer. This is a gamble worth taking. Trump is leveraging America’s strategic advantage over China today. China is an export-based economy that has been nurtured on near-unfettered access to America’s multitrillion-dollar consumer market. By failing to negotiate in good faith, it is putting at risk more than a half-trillion dollars of annual sales and a crash in its economy and stock market.
Even the widespread complaint that the cost of these tariffs will be borne by American consumers may be exaggerated. The last round of tariffs at 10 percent had minimal impact on import prices — suggesting that Chinese companies absorbed the tariffs out of their profits rather than raising prices on goods sold at Walmart. The Chinese swallowed much of the cost themselves.
Trump’s timing for this confrontation could hardly be shrewder. The American economy is riding high, as is the stock market, so we are in good shape to ride this out. Meanwhile, Beijing miscalculated, big time, in thumbing its nose at Trump’s demands. It underestimated Trump’s resolve on this issue. I know Trump: He will not back down on this, and China has only dug itself a deeper hole to climb out of.
China also miscalculated the resolve of Americans and our increased antipathy toward China. I have observed a refreshing rally around the flag on this one. Senate Minority Leader Charles Schumer’s (D-N.Y.) pro-Trump tweet on China (!) is indicative of the frustration Americans feel about China’s misbehavior, economically and militarily. Several other Democrats, including Sen. Sherrod Brown (D-Ohio), also are supportive of the tariffs. We have a rare bipartisan consensus that America has to stand up to China.
What free traders should be doing — if they want to be constructive — is helping Trump pass the U.S.-Mexico-Canada trade agreement, which would further isolate China and advance international trade. Speaker Nancy Pelosi (D-Calif.) should do her patriotic duty and bring the North American free trade deal into the 21st century. At least she should allow an up-or-down vote on the House floor.
This U.S.-China trade dispute is the first skirmish in what is likely to become the epic economic battle of our lifetime. The future of free and fair trade is much better enhanced if Trump wins. If China forces the United States to back down, free trade will suffer a mortal wound. This would be very bad news for free traders and for global prosperity. And it is why Trump must win — and will.
Stephen MooreStephen MooreHow liberals tore down the nomination of Steve Moore Moore: Trump ‘fully supportive’ till end, doesn’t blame GOP female senators Moore won’t be at the Fed, and the economy will be better off for it MORE is a distinguished visiting fellow at the Heritage Foundation and an economic consultant with FreedomWorks. He served as an adviser to the 2016 Donald Trump campaign. His latest book with Arthur Laffer is “Trumponomics: Inside the America First Plan to Revive Our Economy.”