Trump’s zero-tar­iff so­lu­tion

To score a de­ci­sive vic­tory in the tar­iff war with China, Trump must take the moral high ground

The Washington Times Weekly - - Commentary - By Stephen Moore

Pres­i­dent Don­ald Trump’s au­to­mo­bile, alu­minum and steel tar­iff poli­cies have now trig­gered re­tal­ia­tory tar­iffs from other na­tions, in­clud­ing Canada, the EU and China. Last week Mr. Trump im­posed new tar­iffs on more than $30 bil­lion of Chinese elec­tronic equip­ment and other con­sumer goods. Our trad­ing part­ners are now threat­en­ing to hit our do­mes­tic in­dus­tries — in­clud­ing wheat, soy­beans, pork, bour­bon, blue jeans — and even Maine lob­sters. The fi­nan­cial mar­kets are jit­tery to say the least.

Even worse, China’s tit-for-tat tar­iffs are now in­ten­tion­ally de­signed to an­tag­o­nize Trump vot­ers in Mid­west­ern and South­ern states. They are us­ing tar­iffs as a po­lit­i­cal weapon. It’s funny that the hate-Trump left doesn’t seem to protest this bla­tant and dan­ger­ous for­eign med­dling with U.S. elec­tions. They even seem to ap­plaud this elec­tion in­ter­fer­ence by a hos­tile for­eign power be­cause Mr. Trump is the target.

In any case, the goal in all of these for­eign-im­posed tar­iffs aimed at the U.S. is to in­flict max­i­mum eco­nomic pain on Amer­i­can pro­duc­ers in or­der to force Mr. Trump to re­treat.

Re­treat­ing isn’t an op­tion for Mr. Trump — never has been and never will be. So this is a game Bei­jing can’t win. For Mr. Trump to score a de­ci­sive vic­tory, he will need to re­claim the moral high ground in this fight. Our trad­ing part­ners are claim­ing in­dig­na­tion that Mr. Trump has in­sti­gated all these trade dis­putes. Last week the Chinese ac­cused Amer­ica of “fir­ing the first shot.”

That’s a laugh­able claim com­ing from Bei­jing. China’s tar­iffs, ac­cord­ing to a report from the White House Coun­cil of Eco­nomic Ad­vis­ers, are on av­er­age about 10 per­cent, while our tar­iffs are closer to 3.5 per­cent. This doesn’t in­clude non-tar­iff trade hur­dles that make it ex­tremely dif­fi­cult for Amer­i­can com­pa­nies to sell things in China.

We buy three times as much from them as they buy from us. Many U.S. com­pa­nies com­plain with jus­ti­fi­ca­tion, that to do busi­ness in China, they have to dis­close trade secrets and patents, and in some cases sur­ren­der own­er­ship rights of the firm. How is any of this “free trade.”

But even our Euro­pean al­lies have cre­ated any­thing but a level play­ing field. Their tar­iffs are about 30 per­cent higher than ours, ac­cord­ing to the White Coun­cil of Eco­nomic Ad­vis­ers. This does not in­clude the 10 per­cent to 20 per­cent value-added tax that is slapped on Amer­i­can prod­ucts when they hit the shores of Europe. Mr. Trump has told our al­lies that he is not against free trade, but it must be re­cip­ro­cal and right now it isn’t.

This is where Mr. Trump can and should change the terms of this de­bate. He should go back to an of­fer he put on the ta­ble at the re­cent G7 meet­ings in Que­bec with the Euro­peans, Ja­pan and Canada: zero tar­iffs. Mr. Trump chal­lenged the other lead­ers by propos­ing: “We should con­sider no tar­iffs, no bar­ri­ers — scrap­ping all of it.”

It speaks vol­umes about the trade de­bate that none of the for­eign lead­ers, ex­cept per­haps Ger­many’s An­gela Merkel, had any in­ter­est. If the of­fer were made to China, the mer­can­tilist lead­ers would be thrown off their high horse never to re­cover. These na­tions are more in­ter­ested in bash­ing Mr. Trump as a trade war­rior while re­tain­ing their own in­de­fen­si­ble pro­tec­tion­ist trade bar­ri­ers.

All the more rea­son for Mr. Trump to seize the high ground in the trade de­bate by of­fer­ing it up again and again as Amer­ica’s de­sired end game. This is an idea that comes from Mr. Trump’s Na­tional Eco­nomic Coun­cil Chair­man Larry Kud­low and the good news is that my sources tell me the all-in strat­egy is be­ing re­vis­ited at the White House now. Zero tar­iffs would be the ul­ti­mate vic­tory for to­tally free and fair trade. It would ad­van­tage the United States most be­cause we al­ready im­pose the low­est trade bar­ri­ers. It would also ex­pose many of Mr. Trump’s sever­est crit­ics as free-trade frauds. Pres­i­dent Trump, you should do this be­cause the worst that could hap­pen is our al­lies may even take you up on the of­fer. Stephen Moore, a colum­nist for The Wash­ing­ton Times, is a se­nior fel­low at The Her­itage Foun­da­tion. His new book with Arthur Laf­fer, “Trumpo­nomics,” is due out in Septem­ber.


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