Trump’s China Problem Is That a Weak Yuan Is a Strong Weapon
His tariffs lose potency in the face of a currency shift that favors Chinese exporters.
Photos: Getty Images
President Donald Trump has bragged repeatedly, in tweets and press conferences, that China is absorbing the cost of U.S. tariffs on Chinese products. He said it again on Aug. 5, tweeting that “it is now even more obvious to everyone that Americans are not paying for the Tariffs—they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars!”
Trump happens to be wrong about this, but set that aside for a moment and focus on his desideratum. He seems to be saying that he wants Chinese companies to cut the prices they charge by an amount equal to the tariffs to keep their customers unaffected. In his beautiful vision, Chinese companies would bear the full cost of the tariffs. Add the federal government’s import tax onto the discounted China price, and you would get the best of all worlds: more revenue for the federal government, no harm to the American consumer, and a squeeze on the Chinese competition.