Looking for the upside of tariffs on China

I’ve been talking about vibes a lot over the past week, so let’s talk about something a little more substantive. Trump and his movement basically have two main policy ideas: 1.) immigration restriction, and 2.) more tariffs. Let’s think about the second of these.

Tariffs aren’t just a Trump idea anymore – they’re now an important part of the Democratic policy toolkit. Biden’s tariffs on Chinese products, announced back in May, went well beyond anything Trump did in his first term.

I doubt a Harris administration would reverse this approach – some Democrats want to protect American jobs while others want to preserve American manufacturing capacity against the possibility of a war with China. So whoever wins in November, we’re probably going to see tariffs continue to be a key policy tool in the US.

Back in February, I wrote a post about why tariffs often aren’t as effective at reducing trade deficits as their proponents hope, link here.

Basically, there are three reasons tariffs tend to be underwhelming. Most importantly, when you put up tariffs against another country’s goods, it causes that country’s currency to depreciate against your currency.

That makes your exports more expensive and makes imports cheaper for your consumers. This partially cancels out the intended effect of the tariffs. In fact, in the year and a half after Trump put tariffs on China in his first term, the Chinese currency depreciated significantly:

Another factor reducing tariffs’ effectiveness is the many ways that Chinese companies can get around them. They can “re-export” — basically, ship something to a third country, slap a “Made in Vietnam” or a “Made in Thailand” label on it, and then sell it to America, free of tariffs.

They can set up