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Tag Archives: International Trade

Corn or Oil: Choosing Sides

by Pierre Lemieux We can suspect that the political problem will be solved with more horse-trading and continuing purchases of electoral support. But does politics solve or create the issue? "Trump Faces Pressure to Choose Sides in Fight Between Corn Growers and Oil Refiners," ran a title in the Wall Street Journal of April 25. These words summarize the predicament of the modern state. Following a 2005...

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A Collectivist Case for Trade, but not FREE Trade

by Pierre Lemieux Don't Trump and Xi have a different vision of international trade? Not really. Nobody knows how the protectionist tug-of-war between Chinese president Xi Jinping and U.S. President Donald Trump--each one deciding for his flock--will end. Perhaps we'll have a disastrous trade war and recession. Perhaps Chinese consumers and businesses will persuade Xi to back off, as the latter's April 10...

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Why the Chicken Crossed the Road

by Pierre Lemieux In the case of the chicken tariff on light trucks, the main victims were and remain businesses, including small and independent businesses, and ultimately their customers. The so-called "chicken war" of the 1960s continues to illustrate the peculiar rationality of protectionism and collective choices. It was revealed earlier this week that the U.S. government and the government of South...

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How much leverage does America have in trade?

Some, but much less than you might assume. Let's focus on the current trade dispute with China. I often read that Chinese exports to America represent only 3% of Chinese GDP. This is supposed to demonstrate that the US doesn't have much leverage over China. The conclusion is correct, but the reasoning is flawed. That's because 3% of GDP is huge. China would really, really hate to lose a foreign market...

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Back to Basics: Whom Does a Protectionist Measure Hit?

by Pierre Lemieux ...a state's protectionist measures are imposed on its own citizens or subjects. When he announced broad tariffs against Chinese imports, President Donald Trump said about the trade deficit, "It's out of control" ("U.S. To Apply Tariffs on About $60 Billion of Chinese Imports," Wall Street Journal, March 22, 2018). What this means is that American consumers and businesses who import goods...

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What if Trump wins the China IP dispute?

I don't think the US will win its trade war with China, nor do I think a win would be desirable. Nonetheless, it's worth thinking about what would constitute a win. Who would benefit and who would lose? In my view a win would entail the following: 1. China agrees to stop stealing US intellectual property, and instead buys the intellectual property. 2. After China gives in, we remove the tariffs on...

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The Danger of Intellectual Ruts

by Pierre Lemieux Peter Navarro's film raises one interesting question: How can somebody be so wrong? In the wake of the new tariffs on steel, a Wall Street Journal story reminds us of the steel industry's influence over the U.S. government ("Navarro's Ties to Nucor Highlight Trump Advisers' Steel-Industry Connections," March 16, 2018). Many of the senior advisors to the President have worked in or for the...

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What About a Travel Ban to Reduce the Trade Deficit?

by Pierre Lemieux Countries are collections of individuals and trade no more than they eat, consume drugs, or travel. Only individuals do that. Besides the failure to understand the straight economic arguments for free trade, a methodological error often seems to underlie protectionist arguments. The error is to assume that "countries" trade. For example, consider what President Donald Trump said in...

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The National-Security Argument for Protectionism

by Pierre Lemieux I suggest that Adam Smith was still a bit too trustful of the state and that he would be more prudent if he were to come back to life in our times. On March 1, President Donald Trump announced his intention to impose special tariffs on steel and aluminum for reasons of national security. David Henderson and Scott Summer have already weighed in on the issue, but I would like to discuss the...

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