Three years of trade war and supply disruption from the pandemic have the United States looking to reverse decades of migration of American production lines to China and the resulting loss of industrial capability and manufacturing jobs.
A New Approach to Rebalancing the U.S-China Trade Deficit
Cap and trade could succeed where tariffs have failed.
December 20, 2021
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Summary.
Tariffs have not succeeded in reducing the U.S. trade deficit with China. A much better way for the U.S. to tackle this problem and rebuild domestic production is a cap-and-trade system similar to the one for greenhouse gas emissions. The beauty of such a system is its insulation from political favoritism and bureaucracy: Market forces would determine who buys licenses and what gets imported. The cap’s level can be managed relative to a target such as GDP or the size of the trade deficit.