Weeks ago, President Trump announced new tariffs on steel and aluminum, supposedly in an effort to jog the American economy. At the time, he also announced that trade wars were âgood, and easy to win.â His economic rivals reminded him that this had not proven true at any point in American history.
His economic rivals were right, of course. Raising tariffs may be decent security policy from time to time, but itâs bad economic policy: trade wars are unwinnable, because in âwinningâ a trade war, youâre taxing your own citizens. And each time the country youâre tariffing responds with new tariffs, youâre destroying your own export market as well.
China knows this, which is why theyâve responded to Trumpâs new tariffs with massive tariffs on 120 American commodities, including fruit, and raising already-present tariffs on eight more U.S. products.
Now, hereâs the question: what will it take for everyone to back off the tariffs? If China, for example, decided to stop sponsoring the theft of American technology, would the U.S. lower its tariffs? How about if China curtailed its naval exercises in the South China Sea? The problem with Trumpâs tariff strategy is that he needs to explain what he wants from China in exchange for removing the tariffs. Trump hasnât issued such demands, presumably because he is under the impression that tariffs are in and of themselves economically useful and viable.
Thatâs a problem. Trumpâs own team is fine with the tactical use of tariffs in order to extract concessions from rivals on the national security front. Such a strategy would be justifiable. But if Trump believes that tariffs are a pure good, then weâre in for a trade war that will have serious ramifications for American businesses and consumers.
Source: The Daily Wire
