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Looking At U.S. Trade With China


President Trump has announced tariffs on $50 billion worth of Chinese-made products. The president said, quote, "trade between our nations has been very unfair for a very long time. This situation is no longer sustainable." Now, in a quick response, China announced its own duties on $34 billion worth of U.S. goods. Dan Ikenson is director of Cato's Herbert A. Stiefel Center for Trade Policy Studies and joins us now. Mr. Ikenson, thanks for being with us.

DAN IKENSON: Nice to be with you, thank you.

SIMON: The president said these tariffs are needed to prevent unfair transfers of U.S. technology and intellectual property to China. Will tariffs do that?

IKENSON: I don't think so. I think the president has identified a legitimate problem. It's a problem that we've been hearing about for many years. But the president also conflates that intellectual property theft and forced technology transfer issue with just bilateral trade imbalances. And he sees our bilateral trade deficit with China as a sign that we are losing at trade as though trade were a zero sum game. And his intention of imposing tariffs is going to drive up the costs of production for U.S. manufacturers. It's going to drive up the cost of living for households. And there's going to be retaliation, which is also going to hurt U.S. manufacturers and agricultural interests. So it's not very well-thought through.

SIMON: Well, U.S. officials, I believe, have indicated that tariffs might prompt some technology companies to move manufacturing out of China. If they did that, wouldn't that return more jobs to the United States?

IKENSON: You know, I really don't think so. We have to recognize that in technology, as in just about every other industry, we have these global supply chains. There's tremendous interdependence, and throwing up tariffs is equivalent to, like, building a wall in the middle of a factory, the Ford Dearborn, Mich., plant in 1950, right in the middle of the assembly line.

SIMON: What would you suggest?

IKENSON: I think the approach we should have been taking, and maybe it's not too late, is that we should have been standing shoulder to shoulder with our allies, with Japan, Korea, the European Union, to say to the Chinese, look; we have a problem with your technological mercantilism. You're not playing by the rules. We're going to bring cases to the World Trade Organization, which is, you know, enforces the rule of law in trade. There's a narrative that has emerged in Washington that suggests that the WTO can't rein in China, but that is a false narrative.

I think China has complied with most of the judgments that have come down against it so far. There have been 40 cases brought against China since it joined the WTO in 2001. That, by the way, is just a fraction of the cases brought against the United States. But we should use the rule of law. We should stand with our allies. But instead, we've hit our allies with steel and aluminum tariffs. We withdrew from the Trans-Pacific Partnership agreement, which was another way to rein in some of these practices in China. And now, we stand alone as the international bad guy.

SIMON: Mr. Ikenson, I don't think President Trump ever made it secret that he wanted to do this, did he? This is the trade expression of America First.

IKENSON: You know, Trump is making good on his - some of his campaign promises. But to what effect? It seems to me that the biggest losers from a trade war are going to be the people who have supported Trump's presidency, people in the manufacturing sector and people in the agricultural sector. There's a better way to do this, and that's through cooperation. President Trump departs from about 80 years of U.S. trade policy history. Presidents going back to FDR supported the institutions of trade, saw trade as a way to foster good relations among nations and to grow economies. And President Trump doesn't seem to get that at the moment. And there is a certain grievance to this America First nationalism that Trump projects. It's this idea that the United States is this benevolent giant, that after the Second World War we were generous, we had a generosity of spirit, generosity of resources. We rebuilt Europe and Asia. We provided a security blanket for these people to reemerge. And what did they do? Did they thank us? No. They decided to rebuild their industries and challenge us, and sometimes they subsidized those industries. And we need tribute from these countries. And there's this sense that, you know, it's a version of American exceptionalism that I think jeopardizes the whole trading system.

SIMON: Dan Ikenson, director of Cato's Herbert A. Stiefel Center for Trade Policy Studies, thanks so much.

IKENSON: My pleasure, thanks for having me. Transcript provided by NPR, Copyright NPR.