By JIM N. TAYLOR, Special to the Star
Economists agree: All things being fair and equal between countries, the ideal situation would be free trade, with everyone buying from the most economical (cheapest) source.
In efforts to achieve an advantage of some kind, raise government revenue, protect employment, the consumer or industry for whatever reason, tariffs are sometimes imposed by governments. They may also be imposed in retaliation against grievances, which may or may not be related to trade policies.
Tariffs are taxes, and all taxes increase costs of operating businesses and costs of living. Taxes on goods or services distort market values and eliminate freedom in establishing prices through markets.
Tariffs are paid to the government imposing them by those who import or buy the taxed goods or services. Such taxes are an impediment or barrier to trade, as are quotas or bans or any kind of prohibition, inhibition or trade blockage.
Trump is the first U.S. president to openly identify and accuse China and other trading partners of unfairness in their trading practices with the U.S. within the last 50 years. This was long overdue and the tariffs Trump has and will impose on trading partners will be in his effort to obtain the fairness (reciprocity) in trade that we should expect from all trading partners.
New agreements have been reached with some partners, but Congress’ (House) hate for and impeachment efforts of Trump have prevented approval of these improved agreements.
The World Trade Organization has ruled in our favor in most of these trade disputes, and we expect them also to do so in the case of China. But even if they do not, Trump is expected to maintain his position with China until the U.S. gets a fair deal.
The Chinese have long sold us 80 percent more than they have purchased from us, and their policy forces American companies to surrender intellectual property for access to Chinese markets and labor. This allows China to take our knowhow without any cost or waiting period for research and development.
Further, they maintain an army of Chinese students here stealing our research and development, sending it back to China as fast as we get it ourselves. Their cyber warfare and infiltration of our R& D in all firms and institutions is rampant.
Trump put the brake on these operations. China manipulates their currency value to make their goods cheap while it subsidizes exports and production while it cheats labor.
Our secretary of state, embassies, U.N. ambassador and President Trump are developing international cooperation in bringing the world (and the WTO) to an understanding of what is expected in exchange for access to our markets. We expect this to eventually bring us satisfactory reciprocal trade agreements with all partners.
This makes the reelection of Trump important to our immediate and long-term future, since the opposing party has little on their minds except to impeach Trump so that they can more quickly bring us socialism; after which it will not matter what trade policy brings us equality of misery.
One unfavorable result of Trump’s imposition of tariffs will be a slowing of our economic growth by possibly as much as 50 percent (from 4 to 2 percent), and a notable slowing of world economic growth as well.
China’s economic growth may be slowed by as much as 75 percent, depending upon how much of the world follows our lead. Wall Street is unhappy about Trump’s policy because they like to loan money to China. Trump could make even that impossible if necessary but is reluctant to do so.
Jim N. Taylor is a Harlingen resident who has been published regularly in the VMS for many years.