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The latest numbers on U.S. economic growth are astonishingly good. The land of the free enjoyed 3.2 percent annual real GDP growth for the first quarter of 2019. It would have been even higher—3.5 percent—without the government shutdown.
The numbers vindicate President Trump’s position on trade. The dealmaker-in-chief has been saying for decades that a trade deficit is a drag on growth. And we now learn that almost 1 percent of our GDP growth was a result of a reduction in imports.
Imports are down because Trump’s tariffs are driving down the trade deficit with China. Now that he’s increased tariffs on $200 billion more of Chinese goods, expect the U.S. economy to grow even faster.
Even investors, who have long been wary of tariffs, are now beginning to understand this. Despite the uncertainty surrounding trade with China, the stock market has experienced only modest losses, reflecting the overall strength of the U.S. economy.
The United States has put up with Chinese economic aggression for far too long, under both Democrat and Republican presidents. The Trump Administration has taken a decidedly different tack, pursuing an economic nationalist agenda that insists:
- We must defend ourselves against China’s relentless cyberattacks on American businesses, and its theft of hundreds of billions of dollars in intellectual property each year.
- We must stop China’s state-owned, state-subsidized and state-controlled enterprises from the wholesale dumping of products. Flooding foreign markets with steel and aluminum, not to mention autos and robotics, is only the first step. The end game is the destruction of free-market capitalism altogether.
- We must stop China from forcing America companies to hand over their cutting-edge technology as a condition of doing business there. Forced technology transfer is theft, pure and simply.
- We must stop China from manipulating its currency to gain an unfair advantage in trade.
- Finally, we must defend Americans from the flood of fentanyl and other dangerous opioids that are killing them by the tens of thousands. The first two Opium Wars were waged by Great Britain against China. The Third is being waged by China against the United States and its people, and it must stop.
For the past two years, President Trump has sought to reach an agreement with Xi Jinping on these and other issues. And when Xi, meeting with Trump at the G20 Summit in Argentina, asked for more time, the president generously extended the tariff deadline by six more months. The Chinese agreed.
As that June 1 deadline approached, Trump stated publicly that he was looking forward to inking a trade deal with Xi before the end of the month. But the Chinese quickly rebuffed the idea, suggesting that the U.S. president was simply trying to pressure them into a deal.
Then Chinese leaders reneged on large parts of the trade agreement that had already been negotiated—literally at the last minute.
It was a textbook example of bad-faith dealing.
Did Xi ever intend to keep his promises, or was everything he said in Buenos Aires a strategic deception, intended to lull the United States into complacency about China’s intentions and buy time?
Communist strongmen generally hold Western politicians in contempt. Xi may have believed that Trump would go for a soft deal that China could ink and then go back to cheating as usual. Or that he could string out the negotiations until the 2020 presidential election.
If so, it didn’t work. It was evident to Trump—as it should by now be evident to every American—that China simply refuses to play by the rules.
Indeed, in internal party documents, China’s leaders scoff at the very notion of “the rule of law,” viewing it as a Western plot to undermine their continued rule.
Fortunately, we have a president who is now more determined than ever to defend us, our jobs, and our industries from this unprovoked Chinese aggression.
And the first line of defense in the war of aggression being waged by China is tariffs.
The tariffs are bad for China but very good for America. American companies that in the past would have offshored production to China will stay put. Some companies that have already left will be coming back. Whatever the opposite of “offshoring” is—inshoring? reshoring?—we are about to see it happen.
We should expect that China—the Bully of Asia—will try to retaliate. In fact, they have already begun to threaten to do just that. It’s unlikely that President Trump will back down, however. He understands that we buy $5 worth of goods from China for every $1 the Chinese buy from us. That gives us much more leverage.
As far as the soybeans and other grains that China will no longer buy from us, Trump has already announced a plan to make sure that America’s farmers are not hurt. Some of the tariff money will be used to buy and ship grain to parts of the world suffering from chronic food shortages.
If there ever was a time for politics to stop at the water’s edge it is now. The good news is that there is growing bipartisan support for the president to stand up to China.
After decades of cheating in every way imaginable, China has finally worn out its welcome in Washington.
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