Trump bashes Obama trade policy with China in debate

Republican presidential candidates engaged on the trade issue during last night’s debate, with Sen. Cruz calling for a business flat tax that is border-adjustable for exports.    GOP presidential frontrunner Donald Trump said during Thursday’s televised debate in Charleston, S.C., that he believes in free trade, but would slap steep tariffs on goods from China if that country didn’t stop unfair policies designed to give its companies an unfair trade advantage.
   A question on China’s trade practices mushroomed into the most extensive discussion of trade policy in any of the debates so far.
   “China is ripping us on trade. They’re devaluing their currency and they’re killing our companies. You look at the number of companies and the number in terms of manufacturing of plants that we’ve lost – 50,000 because of China,” Trump said, pointing to what he claimed was a $505 billion trade deficit.
   The United States ran a $343 billion deficit between goods imports and exports with China in 2014 and through November 2015 the trade deficit stood at $338 billion, according to the U.S. Census Bureau. Americans buy lots of consumer goods that are cheaper to produce in China because of lower wages, fewer health and safety regulations on factories and an exchange rate the government partially sets lower than the dollar to make the price of Chinese goods more attractive and U.S. exports more expensive.
   “If they don’t start treating us fairly and stop devaluing and let their currency rise so that our companies can compete and we don’t lose all of these millions of jobs that we’re losing, I would certainly start taxing goods that come in from China,” Trump said. He complained that China heavily taxes U.S. exports, but that its imports get a free ride into the United States.
   Trump derided the Obama administration and its trade negotiators as incompetent and said he would appoint someone like activist investor and businessman Carl Icahn, who many have dubbed a corporate raider, to arrange trade deals.
   “I’m a free trader. I believe in it, but we have to be smart and we have to use smart people to negotiate,” he said. “I love China. I love the Chinese people, but they laugh themselves. They can’t believe how stupid the American leadership is,” he said.
   He also criticized Japan for manipulating its currency, saying the lower yen has hurt Caterpillar in its global competition with Komatsu over the sale of heavy construction and mining equipment.
   “We’re letting them get away with it,” he said.
   Ohio Gov. John Kasich said China has a history of dumping goods in the U.S. market at below the cost of production knowing that they can sell the goods for years for any dispute resolution process at the World Trade Organization kicks in, which results in American manufacturers having to lay off workers or close in the meantime.
   “I think we should be for free trade, but I think fair trade. And when countries violate trade agreements or dump product in this country, we need to stand up against those countries that do that without making them into an enemy,” said Kasich.
   Sen. Marco Rubio cautioned, however, that imposing anti-dumping duties only hurts U.S. consumers.
   “China doesn’t pay the tariff, the buyer pays the tariff. If you send a tie or a shirt made in China into the United States and an American goes to buy it at the store and there’s a tariff on it, it gets passed on in the price to price to the consumer.
So I think the better approach, the best thing we can do to protect ourselves against China economically is to make our economy stronger, which means reversing course from all the damage Barack Obama is doing to this economy,” he said.
   His prescription calls for tax and regulatory reform, and repeal of the Obamacare health insurance law.
   But Trump countered that Rubio’s approach would take too long while China continues “sucking us dry.”
   Former Florida Gov. Jeb Bush also warned that China would retaliate against large-scale anti-dumping duties, which would hurt U.S. manufacturers like Boeing and agricultural producers. 
   “Do you think that the Chinese, if they had a 45 percent tariff imposed on all their imports, wouldn’t retaliate and start buying Airbus? Of course, they would. This would be devastating for the economy. We need someone with a steady hand being president of the United States,” Bush said.
   Trump complained that the United States is already undermined when China places airplane orders because the country insists the company build them in China to provide jobs for its workers, but those types of offsets are common in large international deals and have more to do with a company’s efforts to land a particular deal than any trade policy between nations.
   Sen. Ted Cruz said that he has met with officials from John Deere, which makes agricultural and landscaping equipment, who have explained how hard it is to sell tractors in China because of the regulatory barriers there.
   “They’re protectionist…But…if we just impose a tariff, they’ll put reciprocal tariffs, which will hurt Iowa farmers and South Carolina producers and 20 percent of the American jobs that depend on exports,” Cruz said.
   Instead, he proposed a simple flat tax of 10 percent for individuals and 16 percent for businesses, which would be adjusted downward for exports to offset any tariffs faced in an overseas market.
   “So every export pays no taxes whatsoever. It’s tax free. That’s a huge advantage for our farmers, ranchers and manufacturers,” he explained. “And every import pays the 16 percent business flat tax. It’s like a tariff, but here’s the difference: if we impose a tariff, China responds. The business flat tax, they already impose their taxes on us, so there’s no reciprocal tariffs that come against us. It puts us on a level, even playing field, which brings jobs here at home.”