Tariffs on Paper from China – Two Different Views from the Right

It is good to see that Greg Mankiw argues that these tariffs are bad policy:

You might expect me, as a former economic advisor to President Bush, to defend these policy moves by the administration. If so, you’d be wrong. Industrial subsidies are bad policy, but they are bad policy for the country paying for the subsidy. The country buying the subsidized goods benefits from cheaper imports. Think of these subsidies as the opposite of OPEC–another country conspires to sell goods below competitive prices. For the same reason that high prices from a cartel hurt us, low prices from a subsidy help us. It is common sense that when you buy something, you would rather pay less than more for it. That is as true for a nation as it is for a household. The bottom line: The Chinese taxpayers should be complaining about these subsidies, not the American government.

Well said! The free traders at the National Review do not blame President Bush:

The timing of the Commerce Department’s decision late last week to impose tariffs on paper imports from China was no accident. It came just days before the U.S. Trade Representative’s office announced the completion of a U.S.–South Korea free-trade agreement. In order to build congressional support for that deal and other upcoming trade legislation, the administration had to do something big to show U.S. manufacturers that it takes their concerns about China seriously. Unfortunately, the move brings the United States perilously close to the edge of a trade war with China that would have devastating consequences for American consumers.

You see – it’s those Congressional Democrats who are to blame for Bush’s decision to impose tariffs according to the Bush cheerleaders at the National Review. Of course, there are two problems with this garbage from the National Review – both of them being pointed out by Kash. One is that the opposition to free trade has bipartisan elements just as there is bipartisan support for free trade. The other comes here:

As usual, however, any controversy over this agreement will probably be blown considerably out of proportion. On the one hand, passage of the agreeement would probably have no real measurable impact on the US labor market, since tariff rates are already low, wage differentials are relatively small, and Korea is so small (relative to the US economy). But on the other hand, passage of the agreement would probably also have almost no measurable benefit for consumers in the US, for exactly the same reasons.

We imported almost $300 billion in goods from China last year and less than $50 billion in goods from South Korea. And yet the National Review thinks having protection with a nation as large as China is a decent trade-off for reducing protection with a nation the size of South Korea! Go figure.