The Myth Busting Economist by Larry Malone

Debunking the Trump Biden Trade War

There’s plenty of war going on in the world right now, but perhaps you didn’t know that the United States has been engaged in a trade war with China for almost six years. Like everything we deal with in this column, there are a handful of myths ripe for the busting when it comes to trade wars. But before we do that, let’s start by busting a big myth that the current president shares nothing in common with the previous president.

Both Biden and Trump are trade protectionists, which means they are willing to put tariffs—taxes, essentially—on imported items. Tariffs make imported items more expensive, which is supposed to create more reasons to produce those things in the United States. Do tariffs produce such magic? To answer, it’s important to first understand how international trade works.

More than 25 percent of all economic activity in the U.S. involves businesses producing stuff that is either coming into or leaving the country. Last year, the top 10 exports out of the United States included: machinery, vehicles, mineral fuels, pharmaceuticals, precious metals and plastics. Meanwhile, the top 10 imports coming into the United States included exactly the same categories of items! How can that be?