The New York Times economic columnist Paul Krugman has repeatedly denounced President Donald Trump’s protectionist agenda, despite the fact he called for more severe tariffs against China in 2010.
In his Tuesday column, Krugman labeled Trump advisers like Peter Navarro as a “neo-mercantilist” and that “both logic and history say that this view is nonsense.”
During a question and answer session for The Times on March 15, the Nobel Prize winning Krugman claimed tariffs on Chinese steel would ultimately cost jobs and be a net loss for the U.S. economy. While he admitted free trade has “contributed to rising inequality … the level of protectionism it would take to get those few percent back would have lots of ugly side consequences.”
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These points (and the many similar others Krugman has made over the last year) directly contradict a column, “Taking On China,” he wrote almost exactly eight years ago.
Ironically, Krugman’s column reads like a refined Trump speech on trade. “Tensions are rising over Chinese economic policy, and rightly so,” he alleged. As a response, Krugman proposed protectionist policies significantly more aggressive than anything the president suggested.
Krugman called for a 25 percent across-the-board surtax on all Chinese imports instead of just a tariff on select goods, such as steel and washing machines as Trump has.
In 1971, the United States dealt with a similar but much less severe problem of foreign undervaluation by imposing a temporary 10 percent surcharge on imports, which was removed a few months later after Germany, Japan and other nations raised the dollar value of their currencies. At this point, it’s hard to see China changing its policies unless faced with the threat of similar action — except that this time, the surcharge would have to be much larger, say 25 percent, Krugman wrote.
Such a tariff, according to Krugman’s plan, would be pegged to an estimation of how much China is undervaluing its currency.
Despite the fact 2018 Krugman warned Trump any tariff against China could spark retaliatory measures, like the Chinese government, 2010 Krugman dismissed such concerns:
It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings. In short, right now America has China over a barrel, not the other way around.
Krugman opened a column March 8th with the claim: “the wider trade war” Trump’s tariffs “could trigger would be very destructive.”
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