Posted on 09/02/2025 4:50:54 PM PDT by CFW
The Real Economics of Tariffs: Why America Holds All the Cards
The debate over tariffs is often frustrating because it so seldomly touches on reality instead of whiteboard economics of the Ivory Tower. Critics focus on textbook theories about comparative advantage and free trade efficiency, but they ignore the fundamental reality of how global trade actually works today.
For decades, the U.S. has played a peculiar role in the global economy: we consume what the rest of the world produces. That is not a neutral or natural arrangement. It’s the result of policy choices—ours and theirs. And tariffs are finally forcing the world to reckon with this unsustainable imbalance.
The Great Consumption Pyramid Scheme Many governments around the world have built their economies around what might be called consumption deficit strategies. They want their countries to produce more than they consume. That may sound virtuous, even disciplined, but it requires running persistent trade surpluses, which means someone else has to be willing to run trade deficits. Someone has to consume more than they produce.
That someone, for decades, has been us.
(Excerpt) Read more at breitbart.com ...
Well then, they will contribute to payments on our national debt.
The Democrat Party must be happy with the imbalance or it would have orchestrated a collapse of American consumer demand. Which I don’t think would be that hard to do after seeing how close they came to crashing the economy just to get Obama into office.
We consume so much because we have more money to spend.
File under ‘no shiite, Sherlock’.
Enjoy it while it lasts f**kers!
NAFTA and GATT, for instance. THANKS CONGRESS!
The US is 6% of the world’s population.
The rest of the world can do well without the USA.
They can’t say that about China.
The rest of the world needs US consumers like you truly need to support US-based moochers with your tax money.
“Companies are not going to abandon their U.S. market share. They will absorb the tariff costs to keep selling their product to Americans.”
For a period of time, they may be forced to do so, at least partially, but expect to get cut off if something costs $10 to make and only $9 can be gotten for it from US wholesale buyers.
“...The World Runs on America’s Consumption...”
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I wish America ran on American production.
Trump understands this and has led to his success in tariff negotiations. The Canadians for example can stamp their feet and bluster all they want, but cutting off the US market is economic suicide. No other country will buy their products in the quantities that they would sell in the US. Even iconicCanadian whiskey maker, Crown Royal, is now shifting some of its bottling operations to the US to better its stateside distribution.
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