Well-known China expert Gordon Chang has confirmed President Donald Trump is correct when he suggests tariffs are part of the solution of America’s business dealing with China.
Trump has suggested if elected, he’d pursue tariffs as high as 60% on Chinese goods being dumped on American shores.
“I can’t believe how many people are negative on tariffs that are actually smart people,” Trump said just a few weeks ago. “Economically, they’re phenomenal.”
In a commentary at Gatestone Institute, where he is distinguished senior fellow and advisory board member, Chang pointed out that immediately, “a lot of smart people” have insisted that high tariffs are “horrible.”
“Trump is right. Although these levies would increase costs to American consumers, the costs would not be nearly as great as experts say. Moreover, there are other considerations, both economic and national security, favoring raising tariffs now,” Chang wrote.
Bloomberg explained, “As president, Trump shattered the long-standing Republican orthodoxy of favoring free trade. He says he’ll go further if reelected.”
Commentators howled at Trump’s idea, claiming that American consumers would pay a price, and Chang said there is some of that impact present.
But, he said that’s not the result in the short-term.
“In 2018, Trump imposed additional tariffs on China and analysts warned that prices in America would rise. Smart people in America, however, forgot that China had an incentive to effectively pay the tariffs: The Chinese government and exporters absorbed 75% to 81% of the cost of the additional levies. They did so primarily through the government increasing export and other subsidies and factories accepting lower profit margins.”
Trade expert Alan Tonelson said those Trump tariffs “were barely noticed by U.S. businesses or consumers. They certainly did not raise inflation, and they certainly did not cut growth.”
China right now is lobbying against any more tariffs, but Chang said ultimately the communist regime will have to pay.
“This is a contest that the United States cannot lose. In short, trade-surplus countries, such as China, cannot prevail over trade-deficit ones, such as America. Last year, America’s merchandise trade deficit with China was $279.4 billion,” Chang noted.
“China steals each year somewhere in the neighborhood of a half trillion dollars of American intellectual property. Critics of tariffs, whether they make valid points or not about increased costs, have an obligation to say how they would eliminate or reduce this criminal practice through other means.”
And, he noted, “The Communist Party of China sees the U.S. as an enemy and seeks the destruction of the American republic. The struggle, in short, is existential. China’s regime cannot wage the fight against America without American money. So why should Americans supply the cash to their enemy?”
In China, the regime is dependent on higher exports for economic growth.
“Chinese factories, from all indications, are struggling and need to keep customers. For instance, China’s Producer Price Index, which measures factory-gate prices, declined for the 21st consecutive month in June. The Wall Street Journal reports low prices have pushed many factories in China ‘to the brink.’ With prices declining in China, American consumers will not feel the pinch of new tariffs. Furthermore, there is one more reason why U.S. consumers will not suffer. High American tariffs will encourage factories to move out of China. When they do, any pressure on consumer prices will disappear.”
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