Posted on 03/07/2016 9:01:17 AM PST by reaganaut1
Somebody please tell Donald Trump: A trade deficit isn’t a loss. You could even argue it’s a gain.
The Republican presidential frontrunner has been railing against “bad trade deals” since declaring his candidacy last summer. And he’s amplified the criticism, if that’s possible, in recent weeks. “If you look at China, and you look at Japan, and if you look at Mexico … they’re killing us,” he said during the latest Republican debate on Fox News. “With China we’re going to lose $505 billion in terms of trade …. Mexico, $58 billion. Japan, probably about… $109 billion.”
Trump is talking about the annual U.S. trade deficit with those three countries—but the amounts in question are anything but losses. Trade occurs when one party buys something from another, and trade between countries has the same mutual benefit as trade between an individual consumer and a merchant: each side gets something they want. “They’re sending us goods and we’re sending them green pieces of paper,” says Patrick Newport, U.S. economist for forecasting firm IHS Global Insight. “I don’t see how that’s a loss.”
Trump's numbers, incidentally, are off. Here are the U.S. trade deficits with each country in 2015:
China: $366 billion
Japan: $69 billion
Mexico: $58 billion
Those numbers might seem high, but in an $18 trillion economy, they don't really worry economists. What does worry economists is Trump's plan to slap tariffs of 35% to 45% on imports from China and Mexico, a tax that would be passed along almost entirely to consumers. Trump's logic seems to be this: Low-wage countries where workers get paid a fraction of U.S. wages are basically undercutting American workers, and therefore ought to be punished. But his tariffs would punish Americans too, especially lower-income consumers who benefit most from cheap imports.
(Excerpt) Read more at finance.yahoo.com ...
God how the Powers That Be hate Trump.
They see their bought and paid-for access slipping away.
Or, the author is right and Trump is wrong.
God how Trumpsters hate logic and reality!
Have you ever been to China?
Try to find ANYTHING there that is made here at any store on the street. Let me know when you do.
The only real exports we have to China are food and airliners.
Your free trade argument is bogus.
Another idiot that flunked Econ 101. A trade deficit is bad, it is an outflow of wealth from this country.
I guess none of these people remember when this country was a creditor nation and not a debtor nation.
I am continually astounded by the stupidity of those writing finance.
Lol, who is this clown? When the products being exported to the US are products that were once produced in the US, yes it is a loss of millions of jobs and hundreds of billions of economic activity now taking place in some cheap labor nation, and not in the USA.
They must open their markets to our goods equally, or is not free trade.
Seriously, if the Chinese make goods cheaper for Americans, that makes the American buyers of those goods richer. Getting more for your money is the same as having more money. Everyone forgets about that side of the equation when talking about trade. The author is correct, a trade deficit is not a loss.
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Tariffs are constitutional and the only original constitutional method for revenues. So if you don't like tariffs (which don't ban you from buying) move to China.
Free trade has been a failure and jobs lost are greater than the export jobs gained. There is a company I know of personally that made a fortune stripping American factories completely and exporting them to China so they can be re-assembled there. I don't mind seeing those export jobs dry up. Our other main export to China is our timber and scrap metal.
You should go read “Wealth of Nations” by Adam Smith , obviously they didn’t teach much when you were in school.
As a side note, pardon me for screaming,
THE WORLD NEEDS THE USA, WE DON’T NEED THEM!!
Back in the '60s and '70s, news of increased trade deficits would cause the stock market to fall. Now, they pretend skyrocketing trade deficits are no problem, and sometimes that's correct for the former US producer that moved production to a cheap labor nation and now exports back to the US.
And China is working hard to end any need to import commercial airliners from the US, with the assistance Boeing, unfortunately.
So now, a deficit is not a loss, but a gain?
With trade, you either have a surplus or a deficit, but now, this financial genius would have us believe that black is white, up is down and we are too stupid to know the difference.
Higher prices, higher cost of doing business, wages have less value, lower standard of living.
https://www.youtube.com/watch?v=7DhagKyvDck
thanks for your post..
If a trade deficit is bad, explain Hong Kong or at least Hong Kong before it was returned to China.
He’s right - underwear at Walmart does indeed cost less. But, if you stop the accounting there you’re willfully ignorant. The costs associated with all the dislocations fall to the taxpayers and homeowners. All the gain goes to the smaller group of investors. Silly libertarian free trade is a net loser - the facts are in. We’ve deindustrialized america. And there’s hell to pay. Couple that with open borders, a debt fueled welfare state and nation building and your looking at the end of the greatest country ever.
“Trump’s logic seems to be this: Low-wage countries where workers get paid a fraction of U.S. wages are basically undercutting American workers, and therefore ought to be punished.”
This guy is an idiot. Both in economics and on facts: what Trump has stated:
“China is manipulating their currency”
Everyone past 5th grade knows this is the problem, even Romney.
>>>A trade deficit is bad
In my house we love being able to buy stuff cheaper. We’re able to do more with our money, and able to make our business more profitable.
>>>it is an outflow of wealth from this country.
Outflow of dollars that has to be spent... in this country. We get lots of stuff, they get dollars, the dollars come back.
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