Trump Promised a ‘Good and Easy To Win’ Trade War, Then Lost It
President Donald Trump’s declaration on March 2, 2018, that a trade war with China would be “good and easy to win” remains one of the defining moments of his four years in the White House.
That’s only because of how wrong the claim turned out to be. It deserves to live on in infamy alongside George W. Bush’s “mission accomplished” speech and Barack Obama’s “if you like your doctor, you can keep your doctor” promise. Like those, it oversold a complex, messy policy as simple and straightforward. Trump naturally took that presidential hubris to another level, and he paired it with unprecedented policy naivety. If winning a trade war were as simple as tweeting victory into existence with fake statistics, faulty economics, and the veneer of toughness, Trump likely would have succeeded. Unfortunately, that didn’t work.
As he leaves office on Wednesday, Trump deserves some credit for reorienting America’s economic and foreign policies to recognize the threat posed by the Chinese Communist Party to freedom around the world. But his approach—which amounted to little more than levying higher taxes on $460 billion of imports and forcing Americans to foot the bill—was an abject failure. Here are five reasons why Trump lost his trade war.
Misunderstanding How Tariffs Work
Tariffs are taxes applied to goods imported into the United States. This is a simple, basic fact, and it has not been altered by nearly three years of Trump administration efforts to redefine how tariffs work or who pays for them.
Trump has been enamored by the potential use of tariffs to reshape the global economy for decades but he’s apparently never bothered to learn much about how they work. In Trump’s mind, the tariffs were all about creating leverage—making it more expensive to import goods from China, for example, should make China more willing to negotiate on other economic issues. That’s not entirely wrong, but it ignores the self-inflicted wounds caused by Trump’s tariffs, which drained an estimated $57 billion annually out of the U.S. economy in the form of higher consumer costs while simultaneously making it more difficult for businesses to expand.
Trump’s ignorance about tariffs was translated into official administration policy—which is how we got embarrassing moments like this incredible attempt by Treasury Secretary Steve Mnuchin to ignore reality:
Q, @RepCindyAxne: “So are tariffs a tax on imports?”
A. @USTreasury Secretary Steven Mnuchin: “Tariffs are a tariff on imports, they are not a tax.”@RepCindyAxne: “Tariffs are a tax on imports.”
h/t @scottlincicome pic.twitter.com/oHUguViLlf
— ???????????????????? ???????????????????? (@FreeTradeBryan) May 23, 2019
Listening to the Wrong Advisers
Before moving ahead with tariffs on Chinese imports in the summer of 2018, the Office of the U.S. Trade Representative held a series of hearings in which businesses that would be affected by the new import taxes could be heard. The weeklong affair was probably the most depressing scene of the entire trade war: Hundreds of business owners marched one by one before a committee of bureaucrats, each given five minutes to make their case.
Most of them delivered the same message: Tariffs wouldn’t meaningfully impact China’s exports but would place an undue burden on American businesses that import finished or component parts from China. Even business owners
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