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September 22, 2018

Trade Wars: Letter to John Mauldin

The objective of trade wars or mercantilism is to "Beggar Thy Neighbor" a policy (Corn Laws) that Adam Smith opposed as harmful. Today almost all fear Trump's trade policy based on the mistaken belief that Trump wants a traditional protectionist trade war. The latest to chime in is John Mauldin in Thoughts from the Frontline - China for the Trade Win?

This makes discussion difficult. People are chasing after a condition they can’t even define. Victory will remain elusive until they know what they want. Regardless, you can score me on the “no one wins” side. I believe, and I think a lot of evidence proves, that free trade between nations is the best way to maximize long-run prosperity for everyone.

You. like most people, are missing the point because you are thinking INSIDE the Box! You, like most people, you are thinking of the mercantilist trade wars that Adam Smith decried, the mercantilism China and others are using against the United States thanks to feckless previous admistrations, both Republican and Democratic. Not just China but the EU, in their day Japan and Korea, and even Canada. If you don’t believe me, ask your friends at GaveKal Research. They said so in one of their books.

Listen carefully to Trump’s UN speech where he states unequivocally the goals of his administration, "we will defend America to the hilt and every country on Earth should likewise defend theirs." Elsewhere he has said that he wants free trade with minimal tariffs. Lastly read The Art of the Deal. The point of the exercise is to bring America’s trading partners to the bargaining table, not to Beggar Thy Neighbour.

China is playing harder but lots of others have already understood the policy and have come to terms with America. Letting up on China now is a big mistake, specially since the current Chinese president is becoming more autocratic. "Don’t give in, don’t give in, don’t give in…" Churchill’s famous speech.

Regards from,

Denny Schlesinger

Thoughts from the Frontline - China for the Trade Win? by John Mauldin

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Last updated September 22, 2018.