I Can Predict the Future

Folks, you can start calling me Nostradamus now.  From the NYTimes, the U. S. reaps the fruit of Obama’s short-sighted tariffs on Chinese tires:

China said it was investigating whether the U.S. is subsidizing and dumping automotive and chicken meat exports, two days after President Obama put tariffs on Chinese tires.

Global trade wars are bad — they harm everyone involved.  We’ve known this for a long time, and we had it proved in no uncertain terms during the Great Depression.  And yet here we are having fired the first shot, just like we did with the Smoot-Hawley Tariff act.

Don’t read the New York Times article in too much detail — it takes a pretty protectionist stance towards our trade imbalance with China, while ignoring economic fundamentals.  In particular it ignores that 1) trade relations aren’t simply two sided, they are like a triangle or other multi-sided flow diagram; and 2) our trade imbalance with China primarily results from our large deficit (they have to get dollars somehow to buy our t-bills, and the only way they can do that is by selling us stuff).

Comments are closed.