For the past 3 years, ever since he was running for President, Trump has been talking about China and its unfair trade practices. Few can argue with that. Trump is right to note China’s unfair trade practices.
However, given its size (1.2 billion people), it can talk softly while carrying the fastest-growing stick (economy) at its side. China’s economy is not as beholden to the U.S. as it used to be. It is for this reason that if you want to do business in China, and everyone does, including American companies, you must play by China’s rules. Rules that according to the WTO are illegal.
So when Trump says that China does not play fair, he’s right. However, the issue at hand is not the idea, the problem is in the implementation of the solution (or in the case of China, the solution itself). The solution, according to Trump and his advisors, is to impose tariffs on certain goods which mostly come from China. Tariffs artificially inflate the cost of a product. They are an additional tax.
In a simple and abstract world this works like this: Product A (China) costs 25% more than product B (U.S.). In theory product A and B are equal in quality. Most people will purchase product B.
However, this fails when people are forced to purchase product A because either:
- There is no alternative product B.
- Product B, even after the tariffs are imposed, remains more expensive.
- Production of product B is slow and you have no choice but to purchase product A.
- The market is so intertwined that as an importer/exporter of the product in question, you are forced to purchase product A anyway.
- A combination of all of the above
All that said, as a consumer, you may ask, so what? This added tax has to be swallowed by someone during, or after, importation. It’s either swallowed by the importer itself, the producer/manufacturer, the distributor, the consumer, or all of the above. Import tariffs are paid by the importing country, not the exporter.
Therefore, China does not pay our tariffs. That’s is not how they work. Indirectly, the exporter, China, is affected if and when the volume of the export declines, but until that happens, they are not impacted. The importer, however, is impacted immediately after the tariffs are put into place.
This brings us back to implementation. Trump is right to point out there is a problem with China’s trading practices. We all agree. My issue with Trump has always been the same, even if I don’t necessarily agree with the problem or idea in the first place, implementation/solution. Look at this table:
| Idea/Problem | Implementation/Solution | Outcome |
| China’s trading deficit | Import tariffs | Tariffs directly impact the US. |
| North Korea’s Threat | Meet with Kim | Nothing |
| Iran’s Nuclear Treaty | Dishonor it | Nothing |
| Immigration problem at the Southern Border | Build a wall | Nothing |
Do you see the problem? The solution or implementation of the solution is always flawed. They are flawed either because they’ve been proven to not work, or no longer work, or due to its implementation, will not work. Take the current situation with China as an example. There is no question that China’s economy is growing faster than ours. There is no question that at this rate, it will soon be bigger than ours.
How did this happen? Did China impose tariffs on our exports to them? Did China implement other means of boosting their goods over ours? Are some of the policies they’ve implemented, something we can use? Is there a solution that is equally beneficial to both? Can we use our global influence to persuade China to be a more equal trading partner?
No. The easiest, simplest, solution is always the one Trump will peddle. And the outcome will always be the same, nothing.
Trump is pointing out real problems that we should do something about. Yet, his working-solutions are too few. This leads me to one of two, equally terrifying, conclusions:
- Trump has no basic understanding of the world and/or surrounds himself with bad advisors.
- Trump’s worldly-IQ is so low, that his advisors can only work with him by diluting and simplifying solutions to the point they become absurd.
I realize Trump is only one person. I even realize that some, even all, may not be his ideas. But at the end of the day the buck has to stop somewhere. And last time I checked he was Commander in Chief.
