Some Trade Links

by Don Boudreaux on April 9, 2018

in Balance of Payments, Crony Capitalism, Seen and Unseen, Trade

While I could pick some small nits with it, this essay by Paul Krugman on Trump’s trade policies makes several important points.  A slice:

But in that case, why is “bilateral” trade between the U.S. and China so unbalanced? The answer is that it’s largely a kind of statistical illusion. China is the Great Assembler: it’s where components from other countries, like Japan and South Korea, are put together into consumer products for the U.S. market. So a lot of what we import from China is really produced elsewhere.

It’s not clear why we should demand that China stop playing that role.

The editors of the Wall Street Journal warn Trump of some of the dangers to Americans of his tariffs taxes on Americans who buy imports.  A slice:

The basic economic problem with trade protectionism is that it is a political intervention that distorts markets. One political intervention leads to another, and the cumulative consequence is higher prices, less investment and slower economic growth.

Mark Perry is correct that Matt Yglesias is correct about Trump’s astounding ignorance about trade.

Also from Mark Perry are these cartoons that reveal the idiocy – and danger – of Trump’s trade policies.

Shanker Singham and Kay Neufeld wonder what the full price will be for Trump’s punitive taxes on Americans who buy imports.

My Mercatus Center colleague Dan Griswold draws some lessons from last Friday’s U.S. jobs report.

Although I’m not quite as optimistic about the market’s ability to adjust as is John Cochrane, Cochrane does reminds us that, fortunately, people competing in markets can and do take some steps to minimize the ill consequences of punitive taxes on buyers of imports.  A slice:

Political comment: tariffs are taxes on imports. It would do fans of the Administration’s trade policies good to utter the correct “tax” word to describe tariffs. Or “self-inflicted sanctions.”

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