Blue State Blues: When You’re in a Trade War, Win It

Blue State Blues (Breitbart)
Breitbart News

China threatened this week to retaliate against the United States for imposing tariffs on $50 billion worth of imports.

The American tariffs largely targeted high-tech manufactured goods to punish Chinese theft of American intellectual property. China responded by threatening to slap tariffs on American aircraft and agricultural goods, targeting important sectors of the economy in “purple” states like Iowa that voted for Donald Trump in 2016.

China had already slapped a 15% tariff on ethanol earlier in the week in response to the Trump administration’s new tariffs on steel and aluminum.

In response to Chinese threats, Iowa’s senators pounced — on Trump.

Sen. Chuck Grassley (R-IA) said: “[F]armers and ranchers shouldn’t be expected to bear the brunt of retaliation for the entire country. The Administration knew that if it imposed tariffs on Chinese goods, China would retaliate against U.S. agriculture. I warned President Trump as much in a White House meeting in February. Today shows that’s exactly what happened.”

Likewise, Sen. Joni Ernst (R-IA) said: “The administration’s action could hurt global supply chains and may lead to higher consumer prices. Hardworking Iowans and American farmers and ranchers are already struggling to make ends meet.” While allowing that “[t]he President is right to increase pressure on China to change its ways,” Ernst admonished Trump to “reconsider these tariffs and pursue policies that enhance our competitiveness” instead.

Other critics, like Charles Koch, made the case against the Trump administration’s policy by citing basic economic principles. “[T]he less trade we have the worse everybody is,” he said in an interview with the Washington Examiner. “I mean, the less exports we have the less imports we have and that makes us worse off. And the more we isolate ourselves, the less we learn of improvements and developments and innovations around the world.”

Those arguments may all be true. And they are worth considering, and debating — in advance. But once the U.S. faces a trade war, those arguments become largely academic. Because as damaging as a trade war may be for all concerned, the worst possible outcome would be to surrender. If the Trump administration backs down under pressure from domestic interests, China will know that it can take advantage of us even more aggressively in future.

The Chinese, as President Trump is fond of reminding us, are smart. They are gambling that their political system is stronger than ours. They hope that by hurting important political constituencies in a critical midterm election year, they can undermine President Trump’s domestic support and force him to surrender. They do not have the same problem in China: open political criticism is rare. The Communist Party is always right, and does what it wants.

America has to rise to the challenge and unify against Chinese retaliation. Criticism is healthy, but right now the Ricardian law of comparative advantage is less important than Sun Tzu’s Art of War.

Rather than debating how we reached this point, we should debate how best to achieve victory. Happily, there is consensus about what that would look like: we want China to follow the rules, respect our intellectual property, and stop dumping on our markets.

William Galston, a liberal columnist for the Wall Street Journal, made two relevant observations recently. Last year, he noted that “China’s techno-nationalism …  poses the greatest threat to our future.” On Wednesday, he observed that our “worst enemy” is the “partisan rancor” that prevents us from uniting against common dangers.

Free traders — myself included — will have our turn. But for now, the debate has changed. When in a trade war, we must win.

Joel B. Pollak is Senior Editor-at-Large at Breitbart News. He was named to Forward’s 50 “most influential” Jews in 2017. He is the co-author of How Trump Won: The Inside Story of a Revolution, which is available from Regnery. Follow him on Twitter at @joelpollak.

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