Free Trade vs. Protectionism

[GRH]

I must admit that I'm pretty uneducated about the merits of each. I've heard the author of a book called "Free Trade Doesn't Work" give a speech on C-Span2 before. I must admit, I think that I fall into the protectionist camp. We are one of the few nations in the world that employs true free trade. Most of our trade partners smack tariffs on our incoming goods, including China.

Not only does China put duties on American goods, they also manipulate their currency by de facto pegging its value to the dollar. This has led to the Chinese yaun being undervalued. Some economists suggest that the yaun maybe undervalued by as much as 25%. These economists suggest that if the yaun were allowed to appreciate to where market forces would place it, that it would slice the American trade deficit and could create as many as 1 million jobs in America.

Seeing as China is a currency manipulator, I think we should employ some good old-fashioned protectionist policy against them. We could start with 3-7% tariffs on all incoming Chinese goods. Or we could start with a low tariff and raise it a bit more in subsequent years, giving the market time to absorb the price increases. Either way, this would raise revenue and would protect American manufacturing.