The Fox Business Network debate moderators and fellow Republican rivals confronted front-runner Donald Trump over his alleged support of a massive tariff on Chinese exports to the US.
The New York Times last week reported that Trump told the paper he could support putting a 45% tariff on those exports.
Trump claimed to have been misquoted on the 45% figure when asked about it by Fox moderator Neil Cavuto. But he said he “totally” supports threatening China with a significant tariff.
“They can’t believe how stupid the American leadership is,” Trump said of China. “I’m totally open to a tariff. If they don’t treat us fairly — hey, their whole trade thing is tariff. You can’t deal with China without tariff. They do it to us. We don’t do it. It’s not fair trade.”
Ohio Gov. John Kasich (R) interjected by offering a balanced argument for “fair trade,” but many of Trump’s top primary rivals also weighed in by calling tariffs an ineffective economic policy.
Sen. Marco Rubio (R-Florida) jumped into the the discussion by arguing that tariffs cause prices of imports to go up. Rubio cited ties and shirts — two China-made Trump products that Macy’s used to sell — to make his point.
“We are all frustrated with what China’s doing,” Rubio said. “I think we need to be very careful with tariffs and here’s why: China doesn’t pay the tariff. The buyer pays the tariff. If you send a tie or a shirt made in China into the United States and an American goes to buy it in the store and there’s a tariff on it, it gets passed on in the price to the consumer.”
Even the moderators joined in to argue that tariffs can have unwelcome side effects.
After Trump said China is “sucking us dry,” Fox Business anchor Neil Cavuto said, “If you put a tariff on a good, it’s Americans who pay it.”
“Prices go higher,” anchor Maria Bartiromo agreed.
Former Florida Gov. Jeb Bush (R) further said that a massive tariff on Chinese exports to the US would not only raise prices for US consumers, but would also lead to Chinese retaliation against US products.
“This would be devastating for our economy,” Bush said.
Sen. Ted Cruz (R-Texas), who had repeatedly quarreled with Trump throughout the evening, said he agreed with the business mogul that China is ripping the US off. However, he said Bush was right on the economics of the tariff issue.
“Both Donald and Jeb have good points, and there is a middle ground. Donald is right that China is running over President Obama like he is a child, that President Obama is not protecting American workers and we are getting hammered,” Cruz said. “But Jeb is also right that if we just impose a tariff, they will put a reciprocal tariffs, which will hurt Iowa farmers and South Carolina producers and 20% of the American jobs that depend on exports.”
For his part, Trump maintained that he knew exactly what he was doing.
“I know so much about trade with China,” he said. “I’m saying absolutely: We don’t have to continue to lose $550 billion as a trade deficit for the privilege of dealing with China. … We have to be smart.”
Many economists believe tariffs like that such high tariffs would contribute to what is called a “deadweight loss,” or inefficiency built into the economy. The basic economic argument is that tariffs have winners and losers, but the total amount lost would be greater than the amount gained in revenue and in protected industries.
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