Trump Is Right: We Should Raise Tariffs on China
Trump Is Right: We Should Raise Tariffs on China
The free-trade dogmatists’ fantasy has nothing to do with the real world, where Chinese market distortion is rampant.
Newly enacted tariffs on China would hurt the U.S. economy, experts warned in 2018, right before the economy grew by 2.1 million jobs. It’s not surprising the “experts” got it wrong; they often are these days. What’s surprising is that, six years later, people are still listening to them.
This time around, the Washington establishment is fretting about former President Donald Trump’s plan to raise tariffs on all Chinese goods. The legacy media has responded to this proposal by running “explainers” on how Trump’s plan “could kill jobs and worsen inflation.” They cite economists who simplistically declare: “The policy is very bad. Tariffs make consumers poorer. They shrink the economy.”
In reality, tariffs are good for the economy insofar as they counteract market inefficiencies created by adversarial trade practices. China’s anticompetitive tactics in particular give Chinese companies an unfair cost advantage over American companies, which unnaturally shifts business, production, and jobs out of the United States. Tariffs that respond to these tactics prevent or reverse offshoring, preserving America’s economic might and promoting domestic investment.
With tariffs, we can prompt companies to think twice before pouring money into cutting-edge technology and advanced manufacturing equipment in China. Without tariffs, we remain vulnerable to adversarial manipulation. Tariffs skeptics ignore the catastrophic cost of that vulnerability.
Just look at China’s plan to destroy our automotive industry. The Chinese government already subsidizes its auto industry with handouts, tax breaks, financing incentives, stolen intellectual property, and even slave labor. Now Chinese auto companies are trying to bypass all our trade rules, including Trump-era tariffs, by setting up factories in Mexico to take advantage of the U.S.-Mexico-Canada Agreement. If this predatory strategy is successful, the result will be, as Trump put it, a “bloodbath” for the American worker.
That is a far cry from free-market competition, and it isn’t limited to cars, either. China is also trying to flood the U.S. economy with cheap solar panels, lithium-ion batteries, wind turbines, steel, aluminum, textiles, and more. In short, China is intentionally producing more than its struggling domestic market can absorb and inundating the international market with steeply discounted goods.
Beijing’s goal in all this isn’t to turn a profit; it’s to create and reinforce dependencies. That spells trouble for the United States, because dependence on Chinese goods gives power to our chief geopolitical adversary. Remember, Beijing is also using U.S. capital, technology, data, and talent to dominate emerging technologies at the cost of our national security.
Chinese genomics companies, for example, many of which the United States has sanctioned for ties to the Chinese military or the ongoing Uyghur genocide, are infiltrating U.S. hospital systems and buying U.S. genomics companies to stockpile our genetic data. They could be exploiting that data to acquire intelligence or even to design bioweapons. And Beijing is committing similar abuses to gain the edge in artificial intelligence, quantum computing, and semiconductors.
Part of the answer to this problem is stricter U.S. capital and export controls. As chair and vice chair of the Senate Select Committee on Intelligence, Senator Mark Warner or Virginia and I have officially called for such controls. As we wrote in a recent letter to the U.S. Department of Commerce, the United States must “take a comprehensive approach to protecting American technology, investment, data, and talent in critical technology sectors.”
Targeted controls won’t work, though, unless we change our broader economic relationship with China. Even the simplest modern products require many inputs to assemble, and it doesn’t matter that the United States may control 10 percent of those inputs if our adversaries control the other 90 percent. They can and will use that control to choke us off, leaving us poorer and more helpless.
In response, we cannot and should not seek to re-shore every supply chain, but we should change the bad laws and incentives that created our $280 billion trade deficit with China. This means making America’s business environment more competitive and directly incentivizing re-shoring. It means cutting off China’s access to critical technologies. It means deepening our trading relationship with allied and partner countries whose products we can trust. And yes, it means raising tariffs on Chinese goods.
Will greater trade barriers raise some prices at the department store? Perhaps, but American producers will step up to fill the gap. We also need to remember why those prices are so low to begin with. It’s not because Chinese industry is more efficient, and it certainly isn’t because Chinese industry is better. It’s because the Chinese government subsidizes its industry with slave labor and massive market distortions.
We lose a great deal in exchange for those cheap products. Domestic industries fall apart, jobs die, shortages emerge in times of crisis, and Beijing gains the power to hold America hostage. Trump is right: we need strong measures to level this economic playing field and protect American workers.
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