The U.S. and Chinese governments have made their views on the ongoing trade wars clear. The U.S. insists that China is breaking all the rules and China insists that they will not allow the U.S. to dictate the operation of their economy.
What about the global elites? They are watching from the sidelines since the nationalists are in charge in both countries. But what is their view?
This article is written by two of the leading global elites. Their analysis is entirely conventional and mostly wrong. They argue that U.S. consumers will suffer from higher tariffs since tariffs act like taxes on consumers of imported goods. They also argue that slower growth from reciprocal tariffs may result in a U.S. recession.
This simple analysis ignores how dynamic global markets are today. Many U.S. importers lack the ability to pass cost increases along to consumers, so the costs of tariffs are actually borne by importers in the form of reduced margins or have to be absorbed by the Chinese exporters.
Supply chains are flexible. Goods not produced in China can be produced in Vietnam or Indonesia, resulting in lower tariffs and permanent loss of exports for China. By moving supply chain origins and not passing tariff costs to consumers, the actual impact of the trade war on the U.S. economy could be quite small and not nearly enough to induce a recession.
At the same time, gains from new U.S. manufacturing needed to replace some Chinese exports could actually boost the U.S. economy. The complaints in this article are the same misguided economic nostrums the elites have been peddling for decades.
Trump is the one who is following in the footsteps of Alexander Hamilton and Henry Clay when it comes to protecting U.S. jobs and U.S. industry from overbearing foreign competition.
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