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Mamunuru Shankar's avatar

For the following comment, in the same article, Pranay has the following answer towards the end

"Politically, high tariffs were an accepted component of every nation-state’s toolkit a century ago. However, after seven decades of free trade advocacy, America’s reversion to high tariffs will be seen as a significant betrayal in many countries. Most importantly, US authority has declined—Trump himself believes so. In the 1900s, America was already the world’s largest manufacturing superpower. But today, America’s trade partners have more agency in bilateral trade and the wherewithal to sustain a manufacturing supply chain minus America."

Agreed. Still, how long can a country afford to have huge Current account deficits and not be vulnerable?

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Mamunuru Shankar's avatar

Let us take the following stattement from the above article

"Countries can not permanently buy from us unless they are permitted to sell to us, and the more we restrict the importation of goods from them by means of ever higher tariffs, the more we reduce the possibility of our exporting to them."

While this statement is being used to indicate the perils of higher tariffs and protectionism ( which Trump is presently attempting), what will be the scenario if the same statement is applied to China, whose tariffs are higher than those of the US? Why does this not apply to China? By the logic of the above statement, why don't we consider that US is responding to the higher tariffs of China ( or the other countries for that matter)? Why are we faulting Trump when the logic of the above statement supports his action?

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