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 ...
The author is full of crap. THEY are EMPLOYING THEIR PEOPLE while America’s people are taxed enough already and others can’t get a job so have to live off welfare. When WE employ our own people, pay them our dollars here, they spend their dollars basically here and all that builds the economy and pays off our national debt. That is basic economics. Being a shill for the new world order in which other countries win and America loses until we lose our Sovereignty is NOT about US WINNING! Articles like this serve only to show how our schools don’t teach the BASICS anymore, nor do they teach American History, Reading, Writing, and Arithmetic. They teach how to be FOOLS!
...to the federal government, to grow the federal government.
The dollars we give them for the stuff we get invested in the U.S. or spent in the U.S.
If you don’t want to grow the federal government, don’t give it more control over the economy; this is what results from Trumps plan.
And this ancillary point is never brought up. If you incentivize industry to build their business in the US, through proper trade policy, and an aggressive corporate tax rate, you build middle class jobs here in the US.
When that happens, you will get a natural shift over time, from the number of people on the welfare rolls to the workforce.
What monetary gain from that "should" offset any costs to the consumer to this situation.
Getting people back to work here at home is immeasurable in worth. Least by me anyways
Not only that but all those green pieces of paper have to eventually be spent here in the US.
Houses, vacations, companies, commercial real estate, stocks and bonds are being bought by Chinese thus helping those sectors of our economy.
Even Trump himself benefits from it when he brags about how many Chinese are buying his multi million dollars condos!
Free traders = free traitors in my book.
We should have an economic policy that is conceived from first to last to be about enhancing the economic condition of the average working American. To hell with the rest of the world, Be it military or economic terms, the entire population of Asia, Europe and the Middle East does not mean as much to me as the well being of one American Citizen.
Protectionism leads inevitably to shortages, dislocations and poverty in the nations that practice it.
Want an example? Look at Cuba, North Korea, the former Soviet Union before glasnost allowed Russians to enjoy Levi's, Pepsi and rock-n-roll. (It makes no difference whether imports are restricted as a result of tariffs imposed by the home country or an embargo by other nations. The same conditions result.)
There was a time when the Republican Party truly was the party of big business. Tariffs worked in their favor, making foreign products more expensive for not only consumers but also (do I even need to go further?) cotton and tobacco farmers in the Democrat-run South, who were expected to be buying their equipment from industrial New England rather than Europe. Democrats, claiming to represent the "working class" and farmers, wanted the high tariffs reduced.
Nowadays, the two parties have pretty much traded places on trade. Up is down, down is up, as AlGore once said.
Blame our publik schools, the fount of all miseducation in the USA.
Nobody cares until it’s their job sent overseas.
I agree and that is why all these countries are worrying about Trump.
“The dollars we give them for the stuff we get invested in the U.S. or spent in the U.S.”
No. The dollars go to buy US Treasuries, or to buy oil from the OPEC, who then buy US Treasuries.
A very small part has gone out to buy US companies.
“If you don’t want to grow the federal government, don’t give it more control over the economy; this is what results from Trumps plan.”
The fedgov already has complete control over the economy, and won’t stop growing any time soon. But Trump will use it to start to exert control over other country’s economies.
To our benefit.
And correct, that’s not “conservative.”
Whatever the route, the dollars come back to the U.S.
>>>”Trump will use it [government control over the economy] to start to exert control over other country’s economies.”
And our economy as well. Don’t forget that part.
Our prices will go up, cost of living will go up, value of wages will go down, the cost of doing business will go up, our competitiveness will go down. Our exports will go down, other countries will export more.
Trade barriers hurt the countries that raise them.
What you are advocating is the government taking from the many and giving to the few.
Who are the few? Politicians will decide. How will it be implemented? Nice big fat government bureaucracy, with more costs to American business.
Macro-dumb policy.
China’s new aircraft carriers are being paid for with the US trade deficit. Those carriers will kill Phillipinos, Indonesians, Malaysians, Australians, Japanese and Americans. Simple math.
We're taxed enough already!
The solution is higher tariffs!
A lot of them don't, which suits the Fed just fine. If they did, we'd have a god-awful inflation problem.
I think what you’re referring to is when dollars are exchanged for local currency, the bank exchanging them keeps some percentage in dollar reserves.
Is that what you mean?
“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.”
Ding ding ding, we have a winner!
Trump won’t punish Mexico or China very much with tariffs, but he will punish American consumers who will get higher households expenses with no increase in income to compensate.
” Everyone forgets about that side of the equation when talking about trade.”
Because the populists never care about the big picture, or the economy as a whole. They only care about THEIR little piece of the pie. They lost a factory job 20 years ago or something and that’s all they will ever care about.
Anything from Yahoo is anti Trump. It’s like they have exlax’ed up until Nov.
“With trade, you either have a surplus or a deficit,”
Actually, with trade you have a free exchange of goods, services, and/or currency, and the laws of the free market dictate those exchanges tend to be of equal value. Just because it’s called a “deficit” doesn’t mean that there wasn’t an equal exchange.
I am sure the 90 million unemployed Americans feel richer through your incite.
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