Saturday, April 14, 2018

Two Trade Wars: 1807 and 2018

From the American Institute for Economic Research

The legal uncertainties surrounding trade with China have sent people looking for historical precedent for this mess. One jumps out: the targeted trade embargo that the US imposed against Britain in 1807. Let’s look at the parallels and lessons.

For months now, the Trump administration has been threatening every manner of taxes on imports from many countries but on China in particular. The policies would directly attack American consumers and producers of goods in which China has some role in the supply chain. China has responded with taxes on imports that would directly hit the economic prospects of Trump’s political base.

Most recently, in order to escalate further, the president picked a big round number of $100 billion and sent aides out to round up enough products to meet that target. China, the spokesmen of which cannot say enough how much they would far prefer peace and economic cooperation, has retaliated with promises to close more markets to American producers.

Among the latest imported products from China affected are medical supplies and equipment, including pacemakers, artificial limbs, knee replacement parts, defibrillators, fillings for teeth, birth-control pills, vaccines, and that’s just what is on the list. Many other secondary products and services will be affected. The supply of all of these will be restricted and hence the price will increase, provided you can get the products at all. At best it means raising health-care costs, which is pretty much the last thing Americans need...

The [1807] decision turned into the worst disaster of the Jefferson presidency...

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