50% Tariffs On All Chinese Imports, Says Tonelson
President Obama and Treasury Secretary Tim Geithner are treading lightly when it comes to China, perhaps out of fear of annoying a huge US creditor and trading partner.
After all, China lends the United States so much money and touches so much of the US economy that a full-blown trade or currency war could clobber the US economy.
But if the US ever wants to dig itself out of its economic hole, says Alan Tonelson, a fellow at the United States Business and Industry Council and author of “The Race to the Bottom,” we need to fix our enormous trade deficit with China and other countries. And the way to fix it, says Tonelson, is to put high tariffs on all goods imported from China, thus increasing the price-competitiveness of those produced domestically.
Tonelson acknowledges that putting big tariffs on China imports would increase prices for US consumers and that this would hurt the economy in the short-term. But he says there’s no way we’re going to get out of our current economic plight without pain–and no way we’ll ever get back to full strength unless we fix the trade deficit.
Tonelson also plays down fears that erecting tariffs would clobber the economy, the way the Smoot-Hawley Act is thought to have contributed to the Great Depression back in the 1930s. In fact, says Tonelson, Smoot-Hawley did not have anywhere near the impact that most people think. The Depression, in Tonelson’s view, was the result of the extreme imbalances that developed in the 1920s, which were similar to those that our own economy developed over the past couple of decades.