Trump’s Got It Right On Trade

Donald Trump has been savaged by economists and media aligned with establishment candidates for tough positions on trade—media on imports to force China to the negotiating table.

Actually, he’s got it right.

Establishment Democrats and Republicans embrace free trade because it puts free markets first with benefits any decently trained economist should extoll. Unfortunately, trade with China and many nations is hardly market-driven.

It hurts U.S. growth and victimizes America’s families.

Obama’s six-year expansion has averaged 2.2 percent annual economic growth and added 13.6 million jobs. Coming off a similar bout with double-digit unemployment, Reagan delivered 4.6 percent growth and in a smaller economy, added 18.1 million jobs.

Now conditions in China threaten to derail the U.S. recovery. Beijing’s statisticians report China’s growth slowed to  6.9 percent in 2015, down from double digits a few years ago. Western estimates are as low as 4 percent, and much of that is decadent.  

Building apartments and office complexes that attract no tenants, and entire ghost cities, count in China’s GDP tally but add little to productivity. Wasteful outlays have boosted debt to 260 percent of GDP.

Nervous about a looming credit crisis, Chinese investors are heading for the doors—selling yuan for dollars to invest in overseas real estate and securities. This panics global stock markets and pushes down the yuan against the dollar—making Chinese goods artificially more price competitive against American-made products than underlying costs warrant.

For all the talk of a faltering dragon, U.S. imports from China were up, exports down and the bilateral trade deficit increased nearly $25 billion in 2015—killing 200,000 American jobs.

Crippling debt is epidemic among emerging economies, as many borrowed in a mad race to expand manufacturing. Like Japan and theEuropean Union, they now seek to cope with excess capacity and crushing interest payments by cheapening their currencies to juice exports and ship unemployment to America.