The China challenge is fundamentally about the strength of American democracy.
The China challenge is fundamentally about the strength of American democracy.
R ecent inflation has prompted the White House to deliberate, once again, whether to end the Trump-era tariffs on Chinese imports. Although no decision has been made, perhaps we should view the question through Benjamin Franklin’s famous lenses to find better alternatives.
In an often-cited — and sometimes misconstrued — quote, Franklin said this: “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” Partisans love to use these words against one another, but let’s avoid doing so, and instead apply the idea rationally to trade.
Franklin was speaking specifically to a tradeoff where domestic and foreign policies intersect. Many of us tend to think that to enhance national security, something in civil liberties has got to give. Therefore, the best a nation can do is sacrifice as little liberty for as much security as possible. Unfortunately, reality often disappoints. Politicians find it fairly easy to trade liberty for little in terms of tangible extra safety — as Franklin criticized.
The stated goal of the tariffs on $370 billion worth of goods — about two-thirds of all U.S. imports from China — was to compel Beijing to change its unfair trade practices, including intellectual property theft and state subsidies, to domestic firms. To address these threats to U.S. security, we’ve been asking whether the tariffs are worth the compromise on the economic freedom of the American people.
Except that the goal of the tariffs war has not been achieved. The United States taxes Chinese imports at a nearly 20 percent rate, generating $74 billion per year in tariff revenues. That may sound nice, but research by economists Pablo Fajgelbaum, Pinelopi Goldberg, Patrick Kennedy, and Amit Khandelwal has shown that the tariffs are primarily paid by the American people. That means each of the 124 million U.S. households is paying $600 on average every year for the China tariffs. But there’s little evidence that the last four years of economic consequences for Americans have changed any unfair trade practices by the Chinese government — so little that U.S. Trade Representative Katherine Tai essentially gave up on pressuring Beijing to do so.
Alongside other broad-brush protectionist measures, the tariffs have compromised Americans’ liberty without meaningfully addressing security. The omnibus China competition bill, still being negotiated in Congress, would do more to imitate China’s economic central planning than to boost America’s competitiveness. The Justice Department’s “China Initiative,” launched in 2018 and terminated only recently, targeted a wide category of academics with a so-called “nexus to China,” only to send a xenophobic chill through the scientific community while catching little industrial espionage by the Chinese government.
China’s authoritarianism is no doubt a challenge, and countering that influence requires more deliberate policy-making.
Concerns about China’s forced labor, for example, can be addressed to some extent by the Uyghur Forced Labor Prevention Act, which bans imports from the Xinjiang region under a rebuttable presumption that they’re made with forced labor. As for concerns about U.S. technologies used by the Chinese military, Washington can and does impose export control on some Chinese companies. Such targeted enforcement is better suited to advance safety because, in addition to often being more effective, it compromises less on liberty.
Sometimes broad-brush measures against certain sectors in China may be justified, and the U.S. campaign to ban Chinese telecommunications equipment makers like Huawei and ZTE is one example. But even so, policy-makers should take measures to make America’s own telecom equipment sector more competitive. As I have written elsewhere, open networks for 5G and future-generations wireless systems can be a liberating approach to secure and economical substitutes for Chinese telecom equipment.
The China challenge is fundamentally about the strength of American democracy. While rising inflation is a good reason to lift the China tariffs, Franklin would say that they should be removed anyway — even under favorable circumstances.