Several U.S. political leaders have recently reiterated their desire to punish countries that undervalue their currencies.
News flash: Since June 7, 2010, the value of the U.S. dollar has fallen 17.3 percent.
If the United States gives countries a green light to designate low currency rates as an unfair trade practice, which of these trading partners (above) would be the first to impose big tariffs on U.S. exporters?
The potential U.S.-instigated trade war would not be without precedent, as Heritage expert James Carafano notes:
The Smoot-Hawley Tariff Act of 1930 slapped duties on about 20,000 imports. Rather than spur consumption and production of American goods, it sparked an international trade war. By 1932, American exports to Europe were just one-third of what they had been in 1929. Worldwide trade fell two-thirds as other nations retaliated.
Instead of policies that could lead to catastrophic trade wars, our country needs a trade agenda that protects the freedom of U.S. producers and consumers to engage in mutually beneficial transactions.