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De-coupling from an authoritarian adversary is a worthwhile objective, but there are more competent ways of doing that. Back in Trump's first term he put up so
by SkyMarshal 1y ago
De-coupling from an authoritarian adversary is a worthwhile objective, but there are more competent ways of doing that.
Back in Trump's first term he put up some targeted tariffs. They were reasonable, effective, non-destructive to the economy, and Biden actually kept them. Good trade policy often become bipartisan.
There's a way to repeat that success. To effectively incentivize supply chain re-shoring, without destroying the economy and stock market, and being so effective and smart that the next administration keeps the policy, even a Dem admin. Which is:
1. increase tariffs gradually, stepwise, over the first two years +/- of his admin. Also get the math right, not 4x too high.
2. tariffs only on China and other adversaries, not our democratic friends and allies. China is the main economic problem anyway, not EU, Canada, Mexico, Japan, etc.
3. use other tools in addition to tariffs like tax policy for manufacturers (tax credits, accounting changes around equipment amortization, etc). Don't be that guy with only a hammer for whom everything is a nail, diversify, use all the tools available.
A graduated, predictable, multi-pronged approach confers the policy stability and predictability companies need to forecast, plan, invest, and hire. That makes it more likely the next administration will continue the tariff policy, even a Dem admin.
But Trump and Navarro's ham-fisted approach that tanks the stock market and causes shortages and inflation is not going to last. Companies won't invest and hire under those circumstances. It will implode, potentially discrediting the entire concept in the public's view, making it more difficult to implement an actually effective and sensible policy instead.
- kccqzy 1y agoExactly. If this administration were serious about hurting China and re-shoring manufacturing, there are ways to do that correctly so as to cause factories in China to idle, cause capital and technology in China to flow to third countries on which the U.S. imposes no tariffs, cause unemployment in China to rise, and ultimately cause the weakening of China's industrial might. The current administration did nothing like that.