a) The Telegraph is a tabloid, why not link to a better news source?
b) There is precedent for this sort of move, as Krugman's original article said it was done in the 70s with Germany and Japan until they raised their currency values.
Is it a good idea? It's probably a bit risky but it's got to be better than letting China continue to manipulate currency and be a drag on the rest of the world's economy. I imagine a tariff that large would probably get them to float the renminbi fairly quickly.
// Edit: I take back the tabloid comment, I was thinking of the Aussie Telegraph which is absolutely a tabloid. My point still stands, that what China is doing needs to be dealt with and that it's hardly the end of the world to put tariffs on them.
The Telegraph is not a tabloid, in either spririt or actual form factor. In fact, it's the only British daily remaining that is available exclusively in broadsheet.
Manipulating a currency takes a lot of money. They will not be able to keep it up indefinitely unless they start inflating the money supply. That will not be passable for the general populace, and thus they will have to go off the peg when that happens.
The best scenario is a slow unwinding which happens gradually and lets both the chinese and the american economies to adjust slowly.
Creating a trade war on the other hand would make it all happen at once, meaning that the chinese exporters and the american consumers both must adjust ALL AT ONCE. This during a big fall in global trade. This will work .. less than stellar.
Is it a good idea? It's probably a bit risky but it's got to be better than letting China continue to manipulate currency and be a drag on the rest of the world's economy. I imagine a tariff that large would probably get them to float the renminbi fairly quickly.
// Edit: I take back the tabloid comment, I was thinking of the Aussie Telegraph which is absolutely a tabloid. My point still stands, that what China is doing needs to be dealt with and that it's hardly the end of the world to put tariffs on them.