Yesterday, Donald Trump announced $60 billion dollars of tariffs against China. Today, China announced its own tariffs on American goods. Paul Krugman writes that, when it comes to trade, China is a bad actor:
When it comes to the global economic order, China is in fact a bad citizen. In particular, it plays fast and loose on intellectual property, in effect ripping off technologies and ideas developed elsewhere. It also subsidizes some industries, including steel, contributing to world excess capacity.
But Trump's "solution" is no solution at all -- because he doesn't understand how China fits into the global trading structure:
China is, as some put it, the Great Assembler: Many Chinese exports are actually put together from parts produced elsewhere, especially South Korea and Japan. The classic example is the iPhone, which is “made in China” but in which Chinese labor and capital account for only a few percent of the final price.
When Trump starts a trade war with China, he also starts one with Japan and South Korea -- not to mention American companies like Apple. And,
by bumbling into a trade war, Trump undermines our ability to do anything about the real issues. If you want to pressure China into respecting intellectual property, you need to assemble a coalition of nations hurt by Chinese ripoffs — that is, other advanced countries, like Japan, South Korea and European nations. Yet Trump is systematically alienating those countries, with things like his on-again-off-again steel tariff and his threat to put tariffs on goods that, while assembled in China, are mainly produced elsewhere.
As is always the case, Trump's policies are rooted in appalling ignorance. Vanity Fair reports that Trump has told associates,"Now I'm fucking doing it my way." When Stupidity marries Insanity, their offspring will be Explosions. The only questions are: How many and how big will they be? Now that John Bolton has been hired as Trump's National Security Advisor, there should be several big ones.
Image: Disability Arts Online