Should we Impose Tariffs on China?

"Rook" has some thoughts on China and tariffs.

Tariffs not Tax Breaks | The Weekly Standard

 

I guess even logic and reason are clouded by partisan politics. Romney is their guy, not Santorum. Romney promises to "get tough" with China. Santorum wants to compete, with the Chinese and everyone else. Romney good, Santorum bad.

 

That reality is that China manipulates its currency to keep the renminbi sufficiently low to ensure that its goods are the lowest priced available in most markets.

 

But Santorum has reached for the wrong weapon with which to deal with the problem: the tax code.

 

Adam Smith does not counsel sitting idly by while his nation’s tradable goods industries are devastated by a predatory competitor

 

“Revenge .  .  . naturally dictates retaliation .  .  . when some foreign nation restrains by high duties or prohibitions the importation of some of our manufactures into their country.

 

So there you have it. An establishment conservative advocates TARIFFS - not lower or no taxes on our producers, not loosening the regulatory strait jackets on our producers, not making our producers more efficient so they can compete effectively with anyone, compete on not on the basis of government force but on merit.

 

If you recall (some from personal memory, some from reading history books), the tragically misguided erroneous progressive policies of Hoover and FDR plunged the nation into a decade long depression. The Smoot-Hawley Tariff Act spread the joy worldwide, triggering a disastrous wave of protectionism, effectively choking off free trade. You might even make a good case that this trade war had helped to trigger the shooting war. The depression in the US ended only after half a million excess workers were killed off in the war, a free market counter-revolution (the 1946 Congress) greatly reduced taxes on everybody, and our manufacturing base was the only one left intact (thanks to the US Army Air Corps) to meet the demands of a world trying to recover from 6-10 years of devastation.

 

Apparently even conservative establishment pundits don't read history anymore. Here he is, advocating TARIFFS against goods made in China. Not a mention of any concern for how the Chinese might react -- maybe the same as the Japanese did, when FDR cut off oil and scrap metal shipments to them? And while this editorial writer lectures Santorum on others to re-read their "surely dog-eared copies of the Wealth of Nations," he ignores the very passage he quotes in his own article: 

 

There are, of course, also warnings about the negative effects of some of these measures, and these restrictions are exceptions to Smith’s general rule that free trade in most cases enriches the parties to it.

 

Yeah; negative effects such as (1) immediately higher prices for good made in China if we slap tariffs on them, (2) permanently higher prices if the tariffs work, and the Chinese do readjust the value of their currency, or, if they get angry enough, even (3) a new cold war and maybe even a shooting war; in either case much greater defense costs and still higher taxes on us. 

 

THIS is all that Obama and the Democrats need for their campaign this Fall -- Republicans calling for protectionist tariffs, he immediate effect of which is higher prices, therefore even greater hardship for the poor. Bob Beckel on The Five has already used that argument on several shows.

 

NO, the right way to start fighting this is via tax reductions on manufacturing, as Santorum has been proposing. 

 

But that is just the first step. As I argued many times before, the same idea of zero corporate taxes must be extended to all forms of production, to all corporations. Corporations are NOT people; there is no reason for corporations to pay taxes, which they only pass on to their customers anyway. Corporations are voluntary associations of human being who DO pay taxes in all sorts of ways. That should be enough. 

 

Indeed, how could it NOT be extended to ALL corporations? This editorial column begins with the tongue-in-cheek assertion that"some of us at The Weekly Standard who “manufacture” ideas might [also] qualify for the benefit he [Santorum] intends for others." Hah, hah had; that is real funny.

 

Comments

[Veritas]

The question is not whether we should impose tariffs on Chinese goods but whether the U S GOVERNMENT COULD TAKE SUCH AN ACTION IN KIGHT OF THE REALITIES OF THE SITUATION.
If one deals with possible and probable solutions to problems, the answer is a resounding "NO".

Factually, we are heavily indebted to China and continue to boorow from themnt to support our penchant for deficit budgets.

Picture yourself going to the largest bank in town, and to whom you are hheavily indebted and insist on more favorable terms.

A reality pill isin order. We have lost much of our bargaining power because of our indebtedness and apparent unwillingness to take the measures necesary to restore some semblance of economic sanity within our government..

Veritas

[Franklin]

The question is, who would be hurt by tariffs? We import four to five times what we export to China. China would be the short term loser in a trade war.

[writing jobs]

of course for being fair:) we all have our tarriff.

[Ernie]

If our current administration tries to play "gotcha" with the ChiComs in a trade war, guess who loses? They could outsmart our group of empty suits with their hands tied behind them. Besides, all they have to do evaluate-or-devaluate their currency in order to give them the edge. Last but not least, how do you pay hardball with somebody you owe trillions of dollars to? If they "foreclose" the value of our currency would go to zero. The only people that would make happy is Obama and his America-hater entourage.