January 20, 2020


Trump just ran a two-year trade war experiment. It failed. (James Pethokoukis, January 17, 2020, The Week)

Fans of free-market capitalism, you have reason to rejoice. Break out those green Adam Smith neckties hanging in the back of your closet. Party like it's 1999 -- or, even better, 2000 when the internet-fueled Nasdaq hit a record high of 5000 and the U.S. normalized trade relations with China.

The cause for celebration today is President Trump signing a "phase one" trade deal with China. After two years of back-and-forth tariffs that marked the world's worst trade conflict in a century, Beijing and Washington have reached a historic agreement that accomplishes ... not so much, really. It doesn't create balanced trade between the United States and China. It doesn't disentangle the two mega-economies. And it doesn't force China to alter its "state capitalist" economic model built on central planning and subsidies. China doesn't even concede that it has a history of forcing American firms to hand over their technology.

But "not so much" isn't nothing. The singular achievement of President Trump's protectionist experiment is to vividly demonstrate on a global stage that protectionism doesn't work. And for that welcome-if-unintentional result, free marketeers should be delighted -- though not really surprised. After all, Trump's fundamental economic observation about trade is flat-out wrong. 

He will be forgotten in record time.
Posted by at January 20, 2020 6:01 AM