The trade war with China is heating up. The stock market is volatile as a result, and the Federal Reserve may have to cut rates again in the wake of China’s currency devaluation.
President Trump says China is paying “tens of billions” of dollars in tariffs. However, his economic adviser Larry Kudlow agreed the tariffs get paid by importers, businesses and ultimately, consumers. China will feel the pain as well as it takes a GDP hit and its exporters get squeezed for higher costs.
Eighty-four years before it became one of the United States, the Kingdom of Hawaii and the U.S. signed the Reciprocity Treaty of 1875. The free trade agreement gave an open avenue to the U.S. market for sugar and other products grown in Hawaii. Because of the treaty, the U.S. gained land in what would become the Pearl Harbor naval base, and it led to considerable American investment in sugarcane plantations in Hawaii.
The result was a success. San Francisco sugar refiner Claus Spreckels became a significant investor and by 1882, he was exporting 24 million tons of raw sugar from the island nation. The Hawaiian kingdom benefited greatly as well. Under King Kalākaua, exports went from $1.8 billion in 1874 to $13 billion in 1890, an increase of more than 720%. Sugar exports during that same time grew from 24 million pounds to 330 million pounds.
Whichever nation “won” is irrelevant: both the United States and Hawaii benefited. A mutual agreement in which both sides prosper is more advantageous than policies in which both parties get harmed.
—By Jay Caruso
