IN THIS ISSUE:
1. China Needs to be Punished, But Are Tariffs the Answer?
2. China’s Repeated Broken Promises Got Us to This Point
3. Trade Options Other Than Tariffs For Punishing China
4. The US Could End China’s “Most Favored Nation” Status
I’ve written a lot about our trade war with China in recent weeks. I’ve made clear I’m not a fan of President Trump’s tariffs. Fortunately, the US Trade Representative announced today that most of the new tariffs on China, which were set to go in place on September 1, have been postponed until December 15.
While this was good news for stocks, the new 10% tariff on $300 billion of Chinese is still expected to go into effect before the end of this year. So today, we’ll look at some alternatives for punishing Beijing, including revisiting China’s Most Favored Nation status. No one’s talking about that, so I will.
China Needs to be Punished, But Are Tariffs the Answer?
As regular readers know, I have disagreed with President Trump’s decision to use tariffs to punish China for its many unfair trade practices – including decades of trade cheating, theft of US intellectual property and exploitation of American companies in China.
I have argued that trade tariffs are not very effective because they most often result in higher prices for American consumers for goods we import from China. President Trump continues to claim that Chinese companies that sell us goods pay the tariffs. It is widely agreed this is false.
Now it should be noted that US consumer prices on goods we import from China have not gone up much over the last year. That’s because China has devalued its currency to offset the effects of Mr. Trump’s tariffs so far. Of course, that can’t go on forever, and President Trump is calling for yet another big round of tariffs on most everything else China sells us starting in December.