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First Trust Advisors chief economist Brian Wesbury explains why China isn't a currency manipulator and how tariffs will impact the U.S. economy.
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-- -- I'm just an election to pick up one of the points to congress in mid there at the end about China because it came up towards the end of the I'd debate last night.
There -- some controversy here you have Mitt Romney's promise to label China a currency manipulator and gave one.
Of -- Romney presidency if you were to be elected the moderator Bob Schieffer -- Romney if he thought that would spark a trade war here's the response.
Don't they sell us about this much stuff every year.
And we sell them about this my stuff every year so it's pretty clear who doesn't want a trade war.
And there's one going on right now which we don't know about its asylum one and and they're winning.
-- -- chief economist with first trust advisors he joins us now what you make of this whole you know.
Mitt Romney -- Donald Trump on on China throughout the campaign and and -- I guess double or tripling down on being very strong making those points last night.
Sure -- -- Connell I am a free church trader I have been a free trader for thirty years as an economist.
I do not agree that China is currency manipulator they do.
Pay get their currency to the US but that's not why they're goods.
Our chief yet -- sure.
Raising their currency could make their goods more expensive but remember they have.
They have low cost of production low.
Labor rates and and they subsidize their companies so the bottom line is is that US consumers get.
Pretty darn good quality products at very low price rise which means we have more to spend on other things I.
I am worried that this could cause a trade war the Smoot Hawley tariff act was one of the key causes of the Great Depression.
I do not like it when candidates.
Talk about.
By eating at a trade war -- -- especially with a country like China.
-- there -- a lot of people that agree with Romney on other issues wall street journal editorial right jot down who do not agree with him on this issue and are worried about what you're talking about think it's about politics.
Pays about Ohio with jobs in the midwest going to China and Romney having a problem there with the auto bail out.
That said.
What -- the the in the actual effects the economic summit.
If Romney were say -- day one you guys as President Clinton I guess said back in way back in 1994 you guys are currency manipulator.
What would the effects be on day two -- day three and day for.
-- let -- and it all depends of you can call somebody a currency manipulator but then it depends on what you do if we put in a bunch of -- let's say.
You can buy at -- -- for eighty dollars instead of a hundred dollars today and that was the example that President Obama -- last night so let's say American consumers are saving.
Twenty bucks by buying a Chinese Tyre.
Well if we put a tariff of twenty dollars that's -- twenty dollars that consumers don't have.
To spend on an haircut or via.
A meal out or some -- that is produced in the United States.
So what it does.
Is as -- terror is a tax.
On the consumer it reduces living standards and meet this idea that somehow we reason our unemployment rate is high is because of China that's not true we have.
-- way bigger problem stoop to to deal with here China is a small issue compared to the size of our government.
For example how much we're spending.
Let me ask you speak your problems we have to deal with before I let you go -- -- more generally different subject about what's happening today and what's happening in the economy the -- down almost 240 points as we streak.
A lot of big companies had some not so positive things which we've been -- we'll have more on -- coming up to say about the economy the data hasn't been great where are we right now.
Sure -- I think we're our base case is that we avoid a recession that but.
But we have seen clearly seen in the last three or four months that businesses especially.
Have held back business investment when we -- the third quarter GDP report will have fallen for the first time.
In this recovery I think twelve quarters in a row it's gone up and now it's gonna go down.
And we're seeing that in these corporate earnings reports its.
It's worry some to me in -- in that uncertainty.
Is causing businesses to hold back on investment.
But no I don't think it's the front end of a recession I think once the elections over the uncertainty clears if Romney wins.
I think this economy takes -- and grows a lot.
Fast heard that where you DuPont United Technologies -- -- did -- -- talking about then we know absolutely and everything yard Brian thank you Brian.
