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How to Think About the Trade War

The question isn't whether Trump's tariffs are hurting the U.S. economy--they definitely are. They're hurting the U.S. economy, and they're hurting China's economy. And the question isn't who is paying the tariffs--Americans are paying U.S. tariffs on Chinese goods, and the Chinese are paying China's retaliatory tariffs. That's how tariffs work. They directly harm the country assessing the tariffs in order to indirectly harm the targeted country. 

The real questions are as follows: 1) is the damage of the trade war worth it? Is the short-term harm worth some greater long-term good? Some critical geopolitical strategy? 

And 2) are tariffs the best way to accomplish the possible long-term good asserted? 

Even committed free-traders like me should at least be open to the argument that short-term harm could possibly be justified for some greater long-term purpose. 

I'm reminded that there was a policy-induced recession at the beginning of the Reagan administration, but it happened because the decision was made that taming the inflation monster was worth a recession. And it undoubtedly was. Those of us who lived through those years can remember 17% mortgage interest rates.

So, sometimes a policy goal is worth some economic damage. The question it seems to me is whether this is one of those situations.

This is the argument proponents of the trade war should be making, instead of asserting things like the idea that trade deficits matter, which they don't, or asserting that a trade deficit means someone is winning and someone else is losing, which is ridiculous. They shouldn't be arguing that American's aren't paying the tariffs, because we are.

So it seems to me that you can be a free-trader while still arguing for an occasional suspension in free-trade, and I'm open to that argument.

The problem is, that's not what I'm hearing. What I'm hearing is that the mere existance of a trade deficit means China is stealing from us or taking advantage of us, and that the goal is somehow to eliminate the trade deficit and run trade surpluses with all of our trading partners, which is mathematically impossible.

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