Trump's China Strategy

Many years ago, Nobel laureate Paul Samuelson was challenged by a mathematician to name a single proposition in all social science that was both true and nontrivial. Samuelson proposed the principle of comparative advantage, first developed by economist David Ricardo in 1817. It was true, Samuelson argued, as a matter of mathematical deduction, and yet its nontriviality was attested by thousands of intelligent men “who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.”

The “doctrine” in question asserts that trade gains follow when a country specializes in those activities which, at world prices, it is relatively better at, even though it may not have an absolute advantage in them.

President Donald Trump seems to grasp that the doctrine claims only that trade will be mutually profitable, not that both parties will be better off. Accordingly, he announced the U.S. would impose a 10 percent tariff on $300 billion of Chinese imports, in addition to the existing 25 percent tariff on $250 billion in goods introduced last spring. The U.S. then declared China to be a currency manipulator, after it allowed the yuan to drop to 7-to-1 against the dollar—its lowest level in 11 years.

Since then, Trump has scaled back the tariff threat. He announced that the tariffs, which had been scheduled for Sept. 1, will be delayed until Dec....

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