The U.S. Missed Its Chance to Make China Play Fair

Generals, the old saying goes, always fight the last war. A similar (though less pithy) principle is that politicians always propose solutions to the last decade’s problems. In the U.S., there are two main areas where we see this principle at work. The first is immigration -- net illegal immigration stopped a decade ago, but President Donald Trump and his supporters are still up in arms over it. The second is China.

The standard story is that Chinese competition is devastating U.S. manufacturing. According to this tale, China's unbeatable cost advantage, driven by cheap labor, cheap energy and lax environmental protections, is siphoning jobs and investment away from the U.S. at a tremendous rate, exacerbated by China’s artificially undervalued currency.