Trump’s tariff plans would be disastrous for America and the world

livemint.com:

raise tariffs. A lot. He has proposed slapping a 10% tariff on all imported goods, thereby trebling the country’s average and taking American trade protectionism back to its mid-20th-century heyday.

This is not idle talk. Mr Trump’s lieutenants want to double down on the bad bets they placed in his presidency. Robert Lighthizer, Mr Trump’s chief trade negotiator, has proposed a universal tariff that would be as high as is necessary to eliminate the country’s trade deficit.

Peter Navarro, a prickly adviser in Mr Trump’s White House, has called for total reciprocity: if any country has high tariffs on specific American products, Mr Trump should match them. Economic populists, meanwhile, are trying to sell Americans on the merits of all this. On October 28th the Wall Street Journal published an essay by one arguing “Why Trump is right about tariffs".

In fact, the policy would not only fail to achieve its goals, it would also inflict grievous harm on America and the world economy. Mr Trump and his fellow travellers argue that tariffs strike three targets: they lead to a reduction in America’s gaping trade deficit, a source (in their view) of economic weakness; they encourage businesses to manufacture at home; and they counter the manifest injustice of a global economic system in which other countries, especially China, exploit America’s openness. Each of these propositions is bunk.

The argument that tariffs determine the size of the trade deficit is wrong in both theory and practice. The fundamental driver of the trade balance is America’s low national savings rate, which in part reflects its consumer-led economy. Rather than being a sign of fragility, its appetite for imports is proof of its vitality.