President Trump’s tariffs on China may well take a toll on the US economy, but the price of not confronting Beijing would be higher.
The president isn’t playing protectionist here. He’s pushing a single player who needs to be confronted, a cheater and a bully. For decades, China has gotten away with theft of others’ production techniques and other intellectual property, along with technology transfers and mistreatment of US companies. Moreover, it uses its ill-gotten gains to boost its military, adding another threat.
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And Beijing just backed off key concessions it had already made in months of trade talks, expecting Washington to fold.
Instead, Trump goosed fees on $200 billion in Chinese imports to 25 percent, from 10 percent. China struck back with its own new tariffs on US products, and now Team Trump is eyeing fees on another $325 billion in Chinese goods (i.e., basically the rest).
The markets didn’t like it: Beijing’s new tariffs brought a 600-point drop in the Dow. Yet the index is still up 9 percent for the year, and nearly 30 percent since Trump took office.
And the Dow isn’t the US economy, which is now robust, with 3.2 percent growth last quarter and 3.6 percent unemployment in April, the lowest in half a century. If the country can’t afford to stand up to China now, it never will.
There’s a reason the president isn’t taking heat from Democrats on this one issue, even though top economic adviser Larry Kudlow admits “both sides will suffer” in this trade war: China knows it will suffer worse.
Short-term, US consumers will pay a bit more — on goods that make up less than 2 percent of the nation’s $20.5 trillion economy. But China is at growing risk of losing access to the world’s top market, because Americans can buy from other lower-wage producers if Beijing doesn’t blink.
And China’s leadership has no remaining claim to legitimacy if it can’t keep its economy booming: President Xi Jinping needs a deal far more than the US president does.
Trump didn’t start this trade war, but he’s well positioned to win it.
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