Trump’s Wreck of a Platform(Part 2: Conflict with China)

Trump does not like China very much. As well as accusing the country of stealing America’s jobs, he claims they manipulate the yuan, harming trade. Unfortunately, in his haste to create a platform for his campaign, he didn’t think any of it through. With a foundation of mistruths and fallacies, Trump offers a plethora of truly terrible ideas that have the potential to completely ruin America’s economy.

Trump claims that China’s trade policy gives America the short end of the stick. Surprisingly, he’s not wrong; Chinese laws make it difficult, if not impossible, for American companies to prosper in the country. With miles of red tape and strict regulations, the companies usually just find Chinese partners, which leads to a forced sharing of intellectual property. As sharing this information makes the probability of competition much higher, as well as essentially giving Chinese companies most, if not all, of the power in the relationship, American companies undoubtedly get the raw end of any deal.

Unfortunately, Trump took the one piece he was right about, and chose a ridiculous solution: make China “play by the rules” by threatening to end trade relations. This idea is unbelievably terrible for quite a few reasons. The two countries are dependent on each other; America can’t just stop trading with China. America would have to purchase materials from other countries, which would be wildly expensive. Additionally, Congress would have to pass legislation that forces American companies to stop any relations with China, be it trading, partnering, or residing within(this action would likely be in the form of a large tax). That’s not happening. Hordes of special interest groups will unquestionably lobby against any legislation, and if lawmakers are as easily influenced as citizens claim, no bill will pass.

Furthermore, Trump accuses China of making its currency, the yuan, weak compared to the dollar, resulting in America’s trade deficit and low number of factory workers. Disregarding his idea to “officially” complain about it, another questionable solution, there are several points to keep in mind. First of all, trade deficits don’t mean anything, unless they’re enormous(. A senior economist, Benjamin Zycher, noted that “a bilateral trade deficit is utterly irrelevant. My family’s bilateral trade deficit with the local supermarket is enormous, as we buy all our groceries there and sell them absolutely nothing. So what?” America might have had an alarming deficit a decade ago, but it seems to be receding. Adding on, the disappearance of America’s factory workers  really wasn’t China’s fault— it was technology’s. With new technology, companies can produce more with far less workers; why waste money and keep all of them?

To “level the playing field”, Trump has suggested placing giant taxes and tariffs on China. Essentially, what this move does is simply make Chinese goods more expensive, helping American companies compete. This is yet another horrible idea. Many, especially those of the lower income bracket, depend on cheap Chinese goods. Small businesses will also stumble with the cost of maintaining themselves becoming increasingly expensive. In fact, the real beneficiaries appear to be large corporations, entities that the government hardly needs to support. Furthermore, America would definitely be punished by additional restrictions from China and other consequences through the WTO(World Trade Organization). With no moral or economic justification for such an act, it shouldn’t even be considered.

Moreover, Trump has also stated he would lower the corporate tax from about 39% to 15% to incentivize companies to stay instead of moving offshores. This is actually a solid plan, except the reduction is much too high, especially since the government earns less than 15% of its revenue from corporate tax.

Overall, Trump’s trade policy with China is problematic, to say the very least. As well as ruining relations with China, an act that could harm the global economy in numerous fashions, it is based off of several fallacies. Offering ridiculous solutions to the few legitimate claims he makes, his ideas will harm those most in need of help, the low-income earners. Raising prices of basic goods to benefit large corporations does not benefit the people, who Trump would have the most obligation to as president. With the only possible result being absolute turmoil, Trump should reconsider, if not eliminate, that entire part of his platform.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s