Discussion question for week 4

In the 16th through the 18th centuries, countries displayed a form of trade called Mercantilism. They engaged in this in order to become more dominant over another country. The idea behind this trade policy is that you continue to export to a country but you do not import anything from them. Therefore, you are selling to them and not buying from them. Over time, countries have dropped this trade policy and they realize that if they export and import from countries, then both countries will get richer and wealthier.

However, does China have a trade policy of Mercantilism? If so, how do they manage this (hint – think in terms of their fixed exchange rate system) and are the Chinese consumers paying the price for this in terms of not being able to buy nice imported products? Do American consumers benefit from this policy? What will happen in the long run if we keep buying from them and they do not buy from us? Is Trump correct to put tariffs on Chinese imports, or does that just raise the price for the common American consumer? Will China change their trade policy?

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