April 20, 2018 — President Trump enacted steel and aluminum tariffs in March, citing national security. China is the intended target, as most other major suppliers were eventually exempted. On April 2, China retaliated by imposing tariffs on 128 American products (representing about $3 billion of trade), ranging from 15% on fruits to 25% on pork. Trump on April 3 announced 25% tariffs on another 1300 Chinese products representing some $50 billion of trade, citing forced transfer of US technology and IPR. China on April 4 responded with plans for retaliatory 25% tariffs on 106 US exports — including soybeans, autos, and airplanes — to go into effect when the US tariffs do. On April 5, the White House announced it was considering $100 billion of additional tariffs on China.
If these tariffs go ahead, yes, it is a trade war. How will it end?
The US won’t win. Continue reading
March 26, 2018 — Caijing Magazine asked me the following questions about US steel tariffs on 3/14.
- Do you see trade wars coming or they are already here? Will it be easy for the US to win trade wars as President Trump said?
Answer: I see trade wars lurking around the corner. They are not yet here for sure. But recent developments are very worrying.
Of course it will not be easy for the US to win a trade war. This is one of the most foolish things Trump has said Continue reading
March 22, 2018 — Declining growth rates in productivity and GDP have been observed in recent years. A variety of explanations have been offered.
The most prominent explanations involve technology. On the one hand, Robert Gordon (2016) has argued persuasively that we should not expect Information and Communications Technology (ICT) and other technological innovations of recent years to have as big an economic payoff as electricity, the automobile, and other technological revolutions of the past. On the other hand, Martin Feldstein (2017) has argued persuasively that productivity growth is higher than we realize, because government statistics “grossly understate the value of improvements in the quality of existing goods and services” and “don’t even try to measure the full contribution,” of new goods and services, and that these measurement errors are probably becoming more important over time.
Less attention has been given to another possibility: while ICT and other technological developments bring many heralded benefits, they have some less-heralded negative side-effects that may contribute to the slowdown in productivity and growth. Continue reading