Well, here is hoping that if Mr.Trump makes it office next year he will make better, and more well thought out economic decisions for the United States (and the world), but for now it seems apt to point out his hypocrisy with this image.
Sunday, April 10, 2016
How a Tariff on Chinese Imports Would Ripple Through American Life
Donald Trump has made the news again, and this time for his take on international trade policies rather than his misguided statements about "insert-race-here" immigrants. Right-wing politicians with their nationalistic trade policies have never really been a big proponent of imports, and Donald Trump takes it up a notch with his proposal of a 45% tariff on Chinese products. We know that despite its merits free trade is very unlikely to be established considering the detrimental consequences it might have for jobs in the domestic industries, which is what Mr. Trump is trying to resolve. Trade restrictions as a whole tend to lower overall efficiency in the market, while it does bring in some revenue, the overall loss in consumer surplus could surpass it.
Not only would this have a huge toll on consumers, it would take a huge hit on the American producers who were making components for some of these products or even owned the production facilities in China. As the article states, even if products from China were discouraged it would not make a very significant difference in the job market here, so to blindly believe that putting tariffs on Chinese products will "Make America Great Again" is a little naive. Even setting the United States aside, the trade restrictions could have dire effects on China, whose growth has already slowed down significantly.
Well, here is hoping that if Mr.Trump makes it office next year he will make better, and more well thought out economic decisions for the United States (and the world), but for now it seems apt to point out his hypocrisy with this image.
Well, here is hoping that if Mr.Trump makes it office next year he will make better, and more well thought out economic decisions for the United States (and the world), but for now it seems apt to point out his hypocrisy with this image.
Subscribe to:
Post Comments (Atom)
This comment has been removed by the author.
ReplyDeleteChina is an easy target for most anti-outsourcing politicians who want to perpetuate a rhetoric of xenophobia.
ReplyDeleteThe US is one of the most innovative and inventive countries in the world and specializes in exports of high-quality goods and services, and no matter the volume of trade, a country like China which is technologically less advanced than the US, cannot compete.
The structure of the global market is such that a country like the US imposing protectionist policies would be harmful to everyone and to blame a developing country for taking advantage of a system that was constructed by the industrialized nations seems hypocritical at best.
As what we talked about in class, the protectionist trade polices gonna decrease the import when there's no much change in exchange rate, shifting the net exchange rate curve rightward. As a result, real exchange rate will be increased because neither S nor I will be influenced by the trade policy directly. Finally, the export will be influenced by the increasing exchange rate, and both EX and IM are decreased.
ReplyDeleteAt the same time, the influence on China is also mentioned above. It's true that high tariff has great negative influence on Chinese manufacturing and will definitely make China's economy go worse. However, at the same time, we know that Chinese manufacturing is seeking transformation and increasing competitiveness, trying to shift towards higher value-added manufacturing. This is a chance of accelerating the transformation.