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Thomas Gallatin / May 6, 2019

Tariff Strategy: A Long-Needed Corrective Measure

The president is letting China know that he’s serious in his demand for fair trade.

On Sunday, President Donald Trump fired a shot across the bow of the ongoing trade negotiations with China, announcing that if no significant progress was made in those negotiations by Friday, he will raise tariffs from 10% to 25% on $200 billion in Chinese imports. The president also declared he will follow that increase by expanding import tariffs on an additional $325 billion “shortly.” Trump briefly explained, “The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!”

Chinese officials are reportedly considering pulling out of trade talks that were scheduled to resume in Washington on Wednesday. “China shouldn’t negotiate with a gun pointed to its head,” an individual familiar with the Chinese position stated. However, White House economic adviser Larry Kudlow had a different take, arguing, “The president is, I think, issuing a warning here. … [He’s] saying, ‘Guess what? The tariffs will remain’ if China does not agree to trade negotiations.”

As we have previously written, Trump is stepping up to the plate to deal with China’s unfair trade policies, which have threatened and harmed American workers’ jobs and wages. Trump is acting to correct a problem that should have been dealt with 20 or 30 years ago, though politicians on both sides of the aisle failed to do so because of the immediate economic pain it will inflict. Like a cavity in a tooth, however, ignoring it has only made the problem worse.

But there’s another important aspect of Trump’s tariff threat that must not go unnoticed. Over the weekend, North Korea test-launched several short-range missiles, a clear provocation and an apparent backwards step for Trump’s efforts to get Kim Jong-un to give up his nuclear weapons. Trump’s tariff threat is a message to Beijing: Rein in your puppet, Kim. The president won’t be manipulated into allowing China to continue getting away with its abusive trade practices, nor will he give up on his negotiations with North Korea.

The only thing that concerns us about Trump’s tariff move: Senate Minority Leader Chuck Schumer (D-NY), agreed with the decision, urging Trump, “Hang tough. Don’t back down. Strength is the only way to win with China.”

(Edited.)

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