Trade lunacy is back

It’s election season in the U.S., marred only by the minor complication of a criminal trial involving one of the candidates. Trump is on the campaign trail, and he is going big on trade policy. Or rather, trade lunacy.

Here’s Gavin Bade at Politico attempting to explain Trump’s trade policy: 
Trump is considering a 10 percent universal import tariff, the former administration officials said, and one result of that policy could be to make the dollar weaker relative to other currencies. 
This is economic illiteracy of a kind I haven't seen since the heady days of Brexit. Or - more accurately - since the last time one Robert Lightizer was the United States trade representative. He is, once again, setting Trump’s trade agenda. And he appears to be no better informed than he was last time. Why do I say this policy is economically illiterate? Because universal import tariffs don’t weaken the currency relative to the currencies of trade partners and competitors. They are much more likely to strengthen it. Indeed they did, the last time Trump tried this. Why would they work differently now?

Read on here to find out how this works and what alternatives there might be. 


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