So you want to zap China and Mexico?

            I want to ask Trump, “If you graduated from Wharton, didn’t you read the monetarist economists who proved that in the 30’s we had a normal recession that became the Great Depression primarily because of the Hawley-Smoot tariff?”  It killed international trade--just 8% of the US economy in the 30’s but that was enough to devastate the US economy as it tried to recover.  Other countries rebounded handsomely while we languished for a dozen years.

            Do you still want a trade war with China and Mexico? The trouble with anti-dumping and protectionism is that they don’t change the world prices or bring back factories.  You just shoot yourself in the foot.  For example, Chinese companies are flooding us with cheap steel.  We install anti-dumping trade barriers and holler about fairness.  “Our factories have moved overseas!” USA imports about 3% of Chinese steel.  But the Chinese still have cheap steel for sale and the world price stays as low as ever.  That doesn’t help a US steel maker at all.  Nor would any company with overseas operations want to build a new plant in America.

            Now suppose there is a Canadian steel maker who can avoid our trade war with China.  They export cheap steel at the world price and some comes down to the states. But big global companies have lawyers who know how to game the system. A US rival would file an anti-dumping petition on that Canadian company.  The result is that the foreign companies defensively keep their US price higher and pad the profits.  In effect this becomes an unspoken cartel.  Consequently, USA pays a premium and gets no jobs in return. This is a good way to make yourself poor-- America in the 30’s.

            Here’s even worse news.  Cheap exports from China are a result of overcapacity from their slowing economy.  Their weakness, reflected by cheap prices, is spreading worldwide.  Here, we have no inflation and too-cheap interest rates for the Fed to fight another downturn and record debt.  We are vulnerable to recession.  Meanwhile if we impose a trade war on another country, they often retaliate, setting off a chain reaction.  That’s what happened in the 30’s only Europe soon woke up to their idiocy. America’s Republicans became isolationists and Dems gleefully lambasted them for Hoovervilles.  It took a war to fix it.

            Long before I was in politics, I was a businessman who had to be quick and nimble to survive.  You learn to think about this stuff even if you never got a fancy degree from Wharton.  Trump is in business.  Is he stupid or is he just gaming a bunch of low-information voters with populism?  And don’t put faith in Hillary or Bernie who are both against NAFTA and TPP, who count unions as their dearest base.