Absolute free trade would destroy our manufacturing base totally. People forget that even with NO added costs or restrictions American products are still at a disadvantage. Because the dollar is the currency of the world, it’s value does not fluctuate enough to equalize our trade balance. Not on that, but American firms must pay to ship goods across two huge oceans to reach the other wealthy regions of the planet. All of this adds up to our products always being more expensive than others. Our deficit would explode and our manufacturers would be destroyed.
What we need is reasonable trade coupled with effective industrial policies to ensure we remain a manufacturing center.
“People forget that even with NO added costs or restrictions American products are still at a disadvantage. Because the dollar is the currency of the world, it’s value does not fluctuate enough to equalize our trade balance.”
Whether the dollar does or does not “fluctuate” “enough” is NOT because it is considered a reserve currency. It is a function/result of actions of the federal reserve and actions of the treasury. If the balance of trade were different, producing either greater or less demand for dollars, the federal reserve and/or the treasury would act to either lessen or increase demand for dollars, if they thought doing so was needed for the economy in general.
“Not on that, but American firms must pay to ship goods across two huge oceans to reach the other wealthy regions of the planet.”
Just as foreign firms must pay to ship their goods great distances to import them to the U.S. It’s a no brainer.
“All of this adds up to our products always being more expensive than others.”
All it adds up to is a big nothing.
Trade restrictions, not the value of the dollar or the general price of American goods, is the main reason SOME American goods are not exported more than they could be. Another major reason is that American manufacturers have such a large domestic market, they depend less on exports than do many overseas manufacturers. As far as “more expensive” it is European goods most of all in the world that are too expensive, worldwide, more than American goods. Have you ever been to Europe, and shopped?? I guess not.
Protectionism does not help in the long run, as the last quarter’s slowdown helps demonstrate. American protectionism and tariffs WAY more than the international value of the U.S. dollar ALWAYS raises the domestic and export price of American made goods. Why? They are zero sum events. They net out to nothing gained as far as the total U.S. economy, in general, because while helping some they raise the domestic price of production for others. Raise steel tariffs and an American producer dependent on steel gets a price increase on his raw materials and becomes less competitive than his foreign competitors in the U.S. market. What tariffs give with one hand they take away with the other.
The only trade policy the U.S. needs is one that says we have no tariffs or restrictions at all, but if you do then the tariffs and restrictions you set against us will be applied to all your goods coming here.
Yet our trade partners also have to ship their goods across the sea to trade with us at the same disadvantage. I f we cannot build a widget cheaper than the other can with shipping added, then we need to buy their widgets or get the stupid, moronic, progressive Fascist government off our backs.
The economy is not booming because of a tax cut, its booming because Trump removed some regulatory anchors from our sterns where Congress shoved them.