Wednesday, December 19, 2018

Paul Krugman Explains Trade and Tariffs

Paul Krugman took questions from readers about trade after President Trump’s announcement of tariffs on steel and aluminum imports. Here are his answers to some of the hundreds of questions he received. — By the Editors
1. Literally every small consumer item I buy is made in China. Please explain how this came to be (and whether you think we can or should take steps to change it).
2. Should all manufacturing jobs flow to the lowest-cost, lowest-wage environments, regardless of working conditions or environmental impacts? If not, how can a free-trade system prevent this?
3. The government of China is subsidizing the growth of its electric car industry by providing very significant subsidies (about one-third of cost) to consumers. This subsidy will allow the industry to scale up much more quickly and produce electric cars cheaper than anyone else. In a free-trade world, is this good planning, or cheating? — 
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