I have stated before that free trade is a good idea that enriches all participants. I think I understand that President Trump does not agree.
His latest tweetstorm on the subject seems to me to contain an element of desperation. Each tariff he imposes stimulates a new Chinese response.
But wait! You say, what about all those new American jobs? Surely that’s a good thing? Sadly it ain’t because you lose jobs in areas that can no longer compete because of higher local American input prices.
Then of course there is the job loss caused by China refusing to buy American agricultural products like soybeans. AhHa! you say “but the government can compensate the farmers out of tariff revenue” Of course this is true, but you have just allowed the Federal Government to set a proportion of farmers income. Guess how well that works?
The direct job losses are only a first order effect and the need for farm subsidies is a second order effect. You will see more of those second order effects shortly – government subsidies to folks injured by our trade war. They cost lots of money and take oodles of public servants to administer. Then add in the lawyers and slime balls gaming the system and you can have some real fun.
The real problem your children will see are the third order effects – loss of competitiveness, stagnation, poor exports. You will have jobs but they won’t pay very well. This happens for a simple reason; if you are the manager of a business protected behind a tariff wall and you want to raise profits you have two choices; invest in R&D, buy new plant and equipment to become more efficient or lobby Washington to raise tariffs 5%. Guess which option is cheaper and faster?
I lived in a protected economy. You get frustrated by seeing cheaper and better products available overseas while you are constrained to buy expensive shoddy local product, it takes about 20 years to reach that point.
Its rather like drug addiction; the initial high, then larger and larger doses to keep “up” then the gradual health decline as the drug use affects the body. Good luck with being a closed economy, you are going to need it.
P.S. All that stuff about stealing intellectual property is puffery. We all do it, any way we can, as much as we can. China steals from us. We steal from China. Who cares?