The administration of President Donald J. Trump has warned that it supports an aggressive across the board tariff of 45% on all imports from China to neutralize the effects of China's currency manipulation. However, such a tariff cannot withstand an economic and legal analysis. Fundamental economic principles indicate that China's alleged currency devaluation cannot create a real long-term trade advantage and that the effects of currency devaluation have no real effect on the U.S.-China trade balance. Not only is currency manipulation not a cause of the U.S. Trade deficit with China but the proposed remedy of a draconian 45% tariff will only create a grievous self-inflicted wound on the United States and the global economy. From a legal perspective, a 45% tariff cannot be justified under the legal regime of the World Trade Organization as such a tariff runs afoul of the tightly regulated regime of authorized trade sanctions. As the proposed tariff cannot be justified from a legal or economic perspective, it is not an advisable or appropriate response to China's trade practices. © 2017 Daniel Harris Brean and Bryan P. Clark.
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