Free Republic

No economic artifact is as responsible for more confusion and bad policy as is the so-called “trade deficit.” President Donald Trump, of course, frequently rails against the U.S. trade deficit, citing it as evidence of economic weakness at home, of nefarious trade practices abroad, and of the need for trade restrictions. Yet nearly everything Trump asserts about the trade deficit is wrong and often the opposite of the truth. But to be fair, the president’s confusion isn’t unique to him; it’s widespread. We need to bust a few myths about the trade deficit: Myth No. 1: U.S. trade deficits mean...

Trade deficits are not a sign of economic trouble, and trade surpluses are not necessarily a sign of economic health. The problem with all this trade-deficit talk is that nobody seems to know what trade deficits are, what they mean, or what causes them. A trade deficit is nothing like a budget deficit. Each year’s federal budget deficit adds to the total debt owed by the federal government. Trade deficits don’t do that, which is one reason why “trade deficit” is not a very useful term. A trade deficit is just a bookkeeping entry, not a debt that has to...

The Trump administration pushed ahead with plans to impose tariffs on additional $200 billion in Chinese products by releasing a list of targets, marking a sharp escalation in a trade war between the world's two largest economies. The tariffs could take effect after public consultations end on Aug. 30, according to a statement from the U.S. Trade Representative's office Tuesday. (please see full article at the link)

A remark made by U.S. President Donald Trump, that Japan drops bowling balls on U.S. cars during inspection to shut them out of the market, later described as a joke by the White House, has left Tokyo perplexed. During a fundraising speech in Missouri on Wednesday that was transcribed by The Washington Post on Thursday, Trump criticized Japan for conducting unfair inspections on U.S. cars to keep them out of the Japanese market. “It’s called the bowling ball test, do you know what that is? That’s where they take a bowling ball from 20 feet up in the air and...

With large continuing trade deficits, declining manufacturing and rising public debt, we cannot expect a recovery. Worse, we can expect economic conditions to deteriorate until we face the prospect of a total collapse in the United States economy. Here is why. We all know that our trade deficits are through the roof. We import a great deal and we manufacture less and less to export. The services of our service economy are not really exportable like manufactured goods. The result of the continuing trade deficits is huge foreign debt to China and other countries. Well, so what, you might say....

How to bring manufacturing back home -------------------------------------------------------------------------------- Posted: September 29, 2006 1:00 a.m. Eastern In July, our trade deficit hit yet another all-time record, $68 billion, an annual rate of $816 billion. Imports surged to $188 billion for the month, as our dependency on foreigners for the vital necessities of our national life ever deepens. China's trade surplus with us was $19.6 billion for July alone, moving toward an all-time record of $235 billion for 2006 – the largest trade deficit one country has ever run with another. Our deficit with Mexico is running at an annual rate of $60...

The current account deficit widened to its highest level ever in January.As the deficits grows, due to loose monetary policy and overspending, so do the worries about the US dollar and economy. Here's an interesting link to a negative economic assesment from respected Swiss economist Dr. Marc Faber ("Dr. Doom"). Dr. Faber is famous for correctly predicting asset bubbles, such as the that led to the 'Asian Flu'.

HUGE TRADE DEFICITS AND LOSS OF MANUFACTURING JOBS GO HAND IN HAND Danielle DiMartino has another excellent column in today’s News entitled "Trade deficit pressures our economy." Click here (registration required). What I found particularly interesting was her quotes from Dallasite Richard Fisher in a speech he gave this week. Fisher is the Dallas Federal Reserve President and former Democratic candidate for the U.S. Senate in Texas. Here is what Fisher had to say about our trade deficit:

Thirty years ago, the United States finally ended its long and costly war with Vietnam. That war pitted two fundamentally different views of the rights of men versus the power of the state against each other. One side believed men owned themselves and are born with religious, social and political freedom. The other believed the state owns men and was obliged to claim not only the product of a man's labor, but also to dictate his thoughts, his ambition and his beliefs. The necessity and wisdom of the Vietnam War will continue to be debated for decades (I happen to...

CHINA gave way to mounting political, diplomatic and economic pressures yesterday by scrapping its decade-old currency peg to the dollar, revaluing the yuan and paving the way for further rises in its exchange rate. In long-awaited move, partly designed to defuse intense pressure from Washington for a rise in the super-competitive value of the yuan, China said it was switching to a complex new arrangement that linked the yuan’s value to an undisclosed basket of other world currencies. In the sudden change, which caught markets by surprise, China said that, under its new “managed float” arrangement, the yuan would immediately...

What a difference a news leak from the Federal Reserve makes. Ever since this newspaper ran its December 2 page-one article, "Fed View Shifting on Inflation: Rate Rises Likely," the world's leading indicators of future prices have been heading back down. David Malpass of Bear Stearns points out that gold has since dropped to $434 or so from a peak of $456, oil is back down to $41 a barrel and the dollar has been firmer in currency markets. Amazing how that works: The Fed finally signals that it is going to print fewer dollars, and inflation expectations begin to...

BEIJING - China recorded its first-ever agricultural trade deficit in the first half of the year, casting doubts on its ability to remain a self-sufficient food producer, state press reported Friday. The deficit came in at 3.73 billion dollars, the Ministry of Agriculture was cited as saying by the China Daily. Agricultural officials said maintaining food surpluses China has enjoyed for years would likely no longer be possible due to the country's opening to foreign competition under its World Trade Organisation (WTO) obligations. Over the eight years to 2003, China averaged an agriculture trade surplus of 4.3 billion dollars a...

In the world of economic analysis, fundamental truths are sometimes lost to rhetoric. For example, it is fact — not theory — that government budget deficits add exactly that amount to the savings of financial assets that the rest of us hold. Yet politicians and economists have attacked the federal budget deficit on the premise that it reduces savings. Few media moguls pick up on the fact that expansive fiscal policy (the budget deficit) has been directly responsible for the recent increases in non-government savings, just as they overlooked the fact that the Clinton surpluses reduced our savings. Along with...

On December 9, three former national leaders - President George Bush, Canadian Prime Minister Brian Mulroney, and Mexican President Carlos Salinas de Gortari - gathered to mark the 10th anniversary of their signing of the North American Free Trade Agreement (NAFTA) in Washington, D.C. Most of the debate about NAFTA has focused on the movement of plants to Mexico and the direct loss of American jobs as Mexican laborers earning less than $2 an hour are used to replace American workers making six or eight times as much, plus health and pension benefits. Though there are trade disputes with Canada...