Free trade: Yea or Nay?


My readers know that I am a great fan of Thomas Sowell and Dan Mitchell. These economists have convinced me that free trade is “good.” They also convinced me that tariffs are “bad.” Now President Trump has just thrown a hand grenade (new tariffs on steel and aluminum) into the “free trade-globalization-tariffs” debate. It looks as though we will get a real world test of what “reality” is.

It seems as though his target is China, But I wonder whether it isn’t Canada and Mexico (see below) with the real prize being the NAFTA negotiations.

[Source: Fatal Delusions of Western Man, by Pat Buchanan]

Here are a few things to consider. In the 1990s the US (mainly Bush Republicans but also Democrats) granted China most-favored-nation status and threw open America’s markets. So what happened? You already know. China is up $4 trillion in trade surpluses. China’s 2017 trade surplus of $375 billion exceeded its entire defense budget.

Are we now bosom buddies as the free traders predicted? Hardly. President Xi Jinping just  became President-For-Life Xi (does anyone remember Idi Amin?). China’s constitution now allows him to be a dictator. China continues to steal our intellectual property, build, occupy and fortify islands in the South China Sea, and surreptitiously back the Kim Jung Un regime. They also “dump” steel on our markets. (Dumping is defined as the export of a product at a price that is lower in the foreign market than the price charged in the domestic market.) I wouldn’t call that a massive success.

One of the things that really P.O’s me about the Democrat elite is that they believe they know what’s best for Americans and they insist on shoving their notions down our throats. So as we begin our real-world test of tariffs in the globalized market place (very different from the Smoot-Hawley era) are you the least bit interested in what Americans think?

I am the first to admit that I do not know the answer. But as one who spent his entire career testing hypotheses (more than 500 scientific publications) I must admit that I am interested in seeing this play out.

Roy Filly

 

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About Roy Filly

Please read my first blog in which I describe myself and my goals.
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4 Responses to Free trade: Yea or Nay?

  1. hpoppel says:

    Much of China’s output to the US finds its way through Canada and Mexico distorting the official data.
    H

  2. Dick Toomey says:

    Don’t know answers either, Roy; but there likely aren’t any. Generally, I’m opposed to tariffs as a free market advocate. But, if I’m not mistaken, Trump wants an even playing field. No tariffs here. No tariffs there (wherever). End of money manipulation and other such games. If it’s not tariffs, some other strategy needs to end the trade tactics. Easy enough to make generalizations when I don’t know anything. Thanks.

    • Roy Filly says:

      Thanks, Dick. Always glad to hear your thoughts. I also do not know if this paves the road to an even playing field, but it appears we will finally get an answer.

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