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Use Quotas Not Tariffs to Reduce Trade Deficit

Use Quotas Not Tariffs to Reduce Trade Deficit
(Hieronymusukkel/Dreamstime)

By    |   Thursday, 13 September 2018 12:40 PM

With this year’s trade deficit approaching $500 billion, no wonder President Trump is concerned about what this does to our National Debt. As he pointed out, China is the major culprit.

In the month of July, China exported $41 billion to the U.S. but imported only $13 billion. Certainly not a fair trade.

However, adding another $200 billion worth of tariffs (import duties) certainly is counterproductive. Assuming the final tariff on $200 billion is 25 percent, this will add $50 billion added income to the U.S. Treasury.

On the other hand, it will increase the cost of imported goods by $50 billion, in other words, it will increase inflation by about 0.3 percent, an increase of 11 percent on top of the current 2.5 percent inflation — for China’s tariffs alone.

Claiming China is stealing from us is certainly untrue since nobody is forcing us to purchase Chinese goods.

A much better way than imposing tariffs would be the gradual imposition of quotas on certain products as means to reduce the quantity of imports from China.

This of course should be done gradually, perhaps over a number of years in order to prevent economic upsets — here and abroad.

Such gradual changes will also give U.S. manufacturing time to tool-up and adapt to producing items no longer available from China.

The prestigious Oxford Analytic estimates that the average U.S. household saves $850 per year due to cheap Chinese imports.

Speaking of China, President Trump has often complained about China stealing U.S. technology. This is true, because with every machinery exported to China, the Chinese demand an accompanying set of blueprints.

What is less known is that the Chinese government practices another form of brain-drain by enducing Chinese graduate students from U.S. universities to return to their homeland and bringing with them their acquired knowledge of the latest academic research.

To entice students the Chinese government offers monetary incentives, good housing and prestigious jobs. For example one post-doctorial student received the equivalent of $633,000.

In 2016 alone, 432,000 students returned from overseas universities.

On the political front, as of this writing, China and Russia are conducting joint military maneuvers at a scale unheard of since the Cold War.

These are certainly aimed at the United States.

What President Trump was afraid of, and what he tried to avoid by trying to form an alliance with Russia as counterweight against China (see my Newsmax blog of June 2, 2017, "Why the New Russian Sanctions") has come to pass.

Unfortunately, the deep state prevented this from happening by inventing the Russia interfered with the 2016 election story.

The way I see the future, there will be three major blocks: China and Russia, against the U.S. (and possible the UK), with Europe as a neutral in the middle.

As in the old Cold War, the balance of the other minor countries will selectively align them with either block.

Those alliances of less powerful countries are already forming.

Hans Baumann is a licensed engineer in four states and a member of Sigma Xi, the Scientific Research Society. He is an adviser to the dean of the University of New Hampshire Business School. Dr. Baumann has published manuals on valves and was a contributor to many works including the "Instrument Engineers' Handbook" and the "Control Valves Handbook." He has also published several books on business management and German history, including "Hitler's Escape," which suggests that Adolf Hitler did not commit suicide and survived World War II. In his latest book, "Atomic Irony" he proves that the Hirshoma Atom Bomb contained captured German Uranium. For more of his reports, Go Here Now.

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HansBaumann
A much better way than imposing tariffs would be the gradual imposition of quotas on certain products as means to reduce the quantity of imports from China. This of course should be done gradually.
china, cold war, uk, us
603
2018-40-13
Thursday, 13 September 2018 12:40 PM
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