As soon as one bad actor like China massively cheats, they win at the expense of us; they win at the expense of Europe and over time it threatens the entire integrity of the global financial system and the global trading system.

The policy goal is to persuade China to stop cheating. But here's what's interesting - Donald Trump intuitively understands what things should be. I did a study in 2008 where I estimated the impact of China's unfair trade practices on their competitive advantage - the so-called China Price. You know what it came out to be? Forty-three percent. Forty-three percent - very close to what his intuition said we needed in order to equalize things.

This is what Donald Trump understands. This is the trade deficit. We run a trade deficit of close to $800 billion a year.

The Donald Trump trade doctrine is this. America will trade with any country, so long as that deal meets these three criterion: You increase the GDP growth rate, you decrease the trade deficit, and you strengthen the manufacturing base.

No one should be surprised just because somebody isn't successful 100 percent of the time.

When China got into the WTO, that allowed it to sell into any other country within the WTO - not just the United States - at the lowest tariffs that country offered. And the other countries could sell into China at the lowest tariffs that China offered. The problem, right off the bat, was that China had much higher tariffs than everywhere else, so the U.S. and Europe in particular got the short end of that stick.

When we run these big trade deficits and send our jobs offshore, we hold our wages down and our income down. That feeds right back into the biggest part of this whole equation, consumption. This drags GDP down as well.