Why is there a trade deficit with a country if there aren’t trade barriers or other unfairness, such as China’s weaker labor laws and environmental laws? Mathematically, “free trade” treats those things as a “comparative advantage” but we don’t have to pretend that reflects reality.
The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero. It also escalates the tariffs as the trade deficit goes up, and reduces them as the other country imports more of our goods. It’s an elegant formula.
Because it's not a barter economy and you would not naturally have equal dollar quantities of goods to buy from and sell to each trading partner individually.
One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage. What goods/services are they going to buy from the US that they cannot get from more local trading partners cheaper? They can import grains more cheaply from nearby neighbors. Southeast Asia is not going to start buying Teslas & Fods, they are driving around in Suzukis and whatever China makes.
You spend $5/week at your baker, does your baker buy $5/week of software from you?
> The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero.
I don't see why you would expect that.
Consider a rich country that mostly exports expensive manufactured technological things. It imports one of the natural resources it needs for this from some poor country that is mostly poor farmers and the poor laborers who extract that natural resource they export.
Its hard to see a way for the rich country to not have a trade deficit with the poor county. Even with what the poor country makes from exporting their natural resources they are unlikely to be able to afford the items the rich country makes.
Or consider two countries that are both rich and have about the same population but have different tastes. Say in country X 90% of the population likes big SUVs and trucks and only 10% like small cars. In country Y it is 90% who like small cars and only 10% like the big ones.
A car maker that has factories in both countries could find it more efficient to have an SUV/truck factory in X that makes the trucks for both countries and a small car factory in Y that makes the small cars for both countries than to have both an SUV/truck and a car factory in each country.
But since the big SUVs and trucks cost more than the small cars Y is going to have a trade deficit in cars with X.
Is Japan's trade deficit with Australia a good or bad thing? Is Australia ripping off Japan?
The trade deficit is a good thing for Japan because Japan lacks the natural resources it needs as inputs into its industry. It happens to buy those resources from Australia due to comparative advantage.
If Japanese policymakers tried to create a trade surplus with Australia via tariffs, they would make Japan significantly poorer and weaker.
The premise of the formula is flawed. There is nothing inherently unfair about a trade deficit between two countries. There's not necessarily anything nefarious going on if the United States doesn't buy the same amount of goods from Botswana as they might purchase from the United States within any particular year.
Why would free trade eliminate trade deficits? The United States is incredibly wealthy and its citizens and companies can buy more than poorer countries. Not to mention all the other factors that exist in global trade. The belief that trade deficits are bad baffles me.
With Canada, there's a deficit because they are willing to do things like send oil in exchange for promises, and then they use the promises to do things like buy capital that is located in America.
There's nothing about fairness in trade and trade deficits/surplus. Trade is a competition after all. Free trade was what gave the German States an enormous boost and the Zollverein was a key element towards unification even though that was not the intention[0].
Have I missed the news cycle where Trump complained about the CCP committing genocide on the Tibetans and Uyghurs? How they force them into slave labor. Btw, the reading through the Wikipedia article on Penal labor in the United States make me wonder whether where the USA stands...
These tariffs are a soft blockade carried out as part of a decapitation strike[1] against America.
Imagine you are Russia, and you want to stop American support of Ukraine or that you are China and you want to annex Taiwan. You can't enact a blockade or take military action against America yourself, but you can attempt to destroy us from within by compromising people in positions of power. Oligarchs have more in common with each other than with their countrymen.
This administration lies with the truth. It is true that there are trade deficits harmful to America and that not being able to produce our own masks is a national emergency, but enacting a policy like this is insanity. Those trade deficits are born out of financialization[2] which is a result of the exorbitant privilege[3] of managing the reserve currency.
I can't imagine anyone who writes software intuitively supporting this. Radical changes in policy/code break things. Maybe you do it with something vestigial, but would you do something like this to your databases? The economy, the beating heart of the country, is being put at risk.
It takes a truly wild level of being so mad at Trump that it makes you go full Reagan and extol the virtues of free trade and perpetual war to maintain the reserve currency.
Conversely, it must take a truly wild level of indifference towards American politics to watch globalism go up in flames and cheer. Regardless of where you stand on the aisle or how old you are, surely you can't feel much hope for America's economy watching the Apple supply chain capsize. The economy isn't scripted by Seth McFarlane, America's automotive business and manufacturing bases aren't going to start hiring again overnight.
America has supported perpetual war in Palestine for decades and will continue to do so regardless of how globalism fares. There is not an informed citizen in America that will take this rhetoric seriously, we treat Tel Aviv like they're fighting WWIII but can't spare Maxar access to Ukraine during an active conflict.
You want to associate globalism with conflict so badly, but you just can't deny that America will wage war regardless. It's tragic.
Accusing someone of Trump Derangement Syndrome (TDS) is a rhetorical technique to pathologize dissent -- to call dissent a sickness, an irrationality. You did all but use the term. You're presupposing my anger at disastrous policy decisions as irrational to ignore addressing the critique directly. You're putting words in my mouth about Reagan, free trade, or perpetual war. I don't support "free" trade or "free" markets. I believe regulation is necessary, regulation, meaning to control the speed or flow of. Trade or Market's can't be free, only people can be free, and I believe in regulating markets and trade to promote freedom for people.
I don't support war, but I also don't support neutrality. Justice requires taking a side in conflicts. Without solidarity, taking a side in disputes and being willing to sacrifice for the benefit of others, justice cannot prevail.
You know you are literally supporting the policy of someone who is threatening Greenland, Canada, and Panama while also arguing against perpetual war right? Smashing trade relations is a prelude to performing actions our trading partners would disapprove of.
China can subsidize 10-20% tariffs for a few months. They CANNOT subsidize a 54% tariffs.
This will have COLOSSAL impacts on China.
They can't fix domestic real estate, subsidize industries, build their military, fund the Belt & Road, etc, etc with this level of tariffs from their largest customer.
I think so too. They have been expanding pretty much everywhere. From Eastern Europe through South America and Africa. In the last COP climate gathering China gave a signal that they would take the leadership and also get on the "green tech" market i.e. export batteries, EVs, solar panels.
This is the most important investment in our economic future in a generation.
I remember discussing with a Juniper guy back in 2008 or so about how Huawei would just rip off their designs. Back then it was conventional wisdom that China could just copy, not build. Now, Huawei can make state of the art routers with home grown chips. Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable. I don’t want my kids having to learn Chinese and become immigrants (as if China would even allow that) because we shipped the last shreds of our economy over there.
Why limit it to national security or anti-dumping? Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
> Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable.
You're looking at this from a pretty jingoist perspective. Take it from another angle - what was Intel doing in the 60s and 70s that China couldn't copy in some guy's garage? What are American businesses exporting today that China has to copy to take for themselves? Why is globalism such a bad idea, why can't other countries copy our cheap cashgrabs?
You can't protect American businesses if they can't compete on their own merits. You can't demand that people respect your judgement if you reject the institutions of international justice. This is the starting gun into the foot of global trade that will leave America limping to the finish line.
Having grown up in the Rust Belt, it's a bit baffling to me that there are intelligent people out there who don't understand why it's a bad idea.
It's a race to the bottom. The jobs all go to countries where people are paid almost nothing to work 90-hour workweeks, safety and environmental concerns are not existent, and they have totalitarian political systems where anybody who complains about any of the above will be shot.
Said other countries have stronger economies which lifts their geopolitical influence and military power. You definitely don't want to give that to governments with those kinds of terrible value systems.
Part of our society's narrative is that anyone can join the middle class: "If you just work hard, you can get a good job, support a family and live a nice lifestyle." The companies formerly supporting that narrative moved their operations out of our country; those opportunities were never replaced. A narrative that binds our society together -- a fundamental part of the American soul -- is getting destroyed. Which is a big factor causing the terrible current political climate.
From the 1990's to today, a lot of Rust Belt places went from union blue to purple and then turned deep red in an instant in 2016 because somebody was finally acknowledging the problem.
> You can't protect American businesses if they can't compete on their own merits.
The problem is that “free trade” math defines lowered standards as “comparative advantage.” So any first world country that maintains first world standards is automatically unable to “compete in their own merits.” Globalism creates a race to the bottom.
In case anyone hasn't seen it yet, the big chart the administration showed with "tariffs charged to the US" was not real.
They used trade deficit numbers in the "tariffs charged to the US column". The numbers in that column are not actually tariffs charged to the US.
The entire "reciprocal tariff" claim was based on a big lie.
Trump also repeated claims that the US trade deficit with Canada was "close to $200 billion" when the official trade deficit is significantly less.
Why is there a trade deficit with a country if there aren’t trade barriers or other unfairness, such as China’s weaker labor laws and environmental laws? Mathematically, “free trade” treats those things as a “comparative advantage” but we don’t have to pretend that reflects reality.
The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero. It also escalates the tariffs as the trade deficit goes up, and reduces them as the other country imports more of our goods. It’s an elegant formula.
Because it's not a barter economy and you would not naturally have equal dollar quantities of goods to buy from and sell to each trading partner individually.
One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage. What goods/services are they going to buy from the US that they cannot get from more local trading partners cheaper? They can import grains more cheaply from nearby neighbors. Southeast Asia is not going to start buying Teslas & Fods, they are driving around in Suzukis and whatever China makes.
You spend $5/week at your baker, does your baker buy $5/week of software from you?
11 replies →
> The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero.
I don't see why you would expect that.
Consider a rich country that mostly exports expensive manufactured technological things. It imports one of the natural resources it needs for this from some poor country that is mostly poor farmers and the poor laborers who extract that natural resource they export.
Its hard to see a way for the rich country to not have a trade deficit with the poor county. Even with what the poor country makes from exporting their natural resources they are unlikely to be able to afford the items the rich country makes.
Or consider two countries that are both rich and have about the same population but have different tastes. Say in country X 90% of the population likes big SUVs and trucks and only 10% like small cars. In country Y it is 90% who like small cars and only 10% like the big ones.
A car maker that has factories in both countries could find it more efficient to have an SUV/truck factory in X that makes the trucks for both countries and a small car factory in Y that makes the small cars for both countries than to have both an SUV/truck and a car factory in each country.
But since the big SUVs and trucks cost more than the small cars Y is going to have a trade deficit in cars with X.
2 replies →
Is Japan's trade deficit with Australia a good or bad thing? Is Australia ripping off Japan?
The trade deficit is a good thing for Japan because Japan lacks the natural resources it needs as inputs into its industry. It happens to buy those resources from Australia due to comparative advantage.
If Japanese policymakers tried to create a trade surplus with Australia via tariffs, they would make Japan significantly poorer and weaker.
The premise of the formula is flawed. There is nothing inherently unfair about a trade deficit between two countries. There's not necessarily anything nefarious going on if the United States doesn't buy the same amount of goods from Botswana as they might purchase from the United States within any particular year.
6 replies →
Why would free trade eliminate trade deficits? The United States is incredibly wealthy and its citizens and companies can buy more than poorer countries. Not to mention all the other factors that exist in global trade. The belief that trade deficits are bad baffles me.
With Canada, there's a deficit because they are willing to do things like send oil in exchange for promises, and then they use the promises to do things like buy capital that is located in America.
I guess you can decide that's unfair.
Because America has the "exorbitant privilege" of being a global reserve currency:
https://en.wikipedia.org/wiki/Exorbitant_privilege (it's a Wikipedia page about monetary policy).
There's nothing about fairness in trade and trade deficits/surplus. Trade is a competition after all. Free trade was what gave the German States an enormous boost and the Zollverein was a key element towards unification even though that was not the intention[0].
Have I missed the news cycle where Trump complained about the CCP committing genocide on the Tibetans and Uyghurs? How they force them into slave labor. Btw, the reading through the Wikipedia article on Penal labor in the United States make me wonder whether where the USA stands...
[0] https://en.wikipedia.org/wiki/Zollverein [1] https://en.wikipedia.org/wiki/Penal_labor_in_the_United_Stat...
These tariffs are a soft blockade carried out as part of a decapitation strike[1] against America.
Imagine you are Russia, and you want to stop American support of Ukraine or that you are China and you want to annex Taiwan. You can't enact a blockade or take military action against America yourself, but you can attempt to destroy us from within by compromising people in positions of power. Oligarchs have more in common with each other than with their countrymen.
This administration lies with the truth. It is true that there are trade deficits harmful to America and that not being able to produce our own masks is a national emergency, but enacting a policy like this is insanity. Those trade deficits are born out of financialization[2] which is a result of the exorbitant privilege[3] of managing the reserve currency.
I can't imagine anyone who writes software intuitively supporting this. Radical changes in policy/code break things. Maybe you do it with something vestigial, but would you do something like this to your databases? The economy, the beating heart of the country, is being put at risk.
[1]Timothy Snyder -- Decapitation strike: https://archive.is/1xkxK [2] https://en.wikipedia.org/wiki/Financialization [3]https://en.wikipedia.org/wiki/Exorbitant_privilege
It takes a truly wild level of being so mad at Trump that it makes you go full Reagan and extol the virtues of free trade and perpetual war to maintain the reserve currency.
Conversely, it must take a truly wild level of indifference towards American politics to watch globalism go up in flames and cheer. Regardless of where you stand on the aisle or how old you are, surely you can't feel much hope for America's economy watching the Apple supply chain capsize. The economy isn't scripted by Seth McFarlane, America's automotive business and manufacturing bases aren't going to start hiring again overnight.
America has supported perpetual war in Palestine for decades and will continue to do so regardless of how globalism fares. There is not an informed citizen in America that will take this rhetoric seriously, we treat Tel Aviv like they're fighting WWIII but can't spare Maxar access to Ukraine during an active conflict.
You want to associate globalism with conflict so badly, but you just can't deny that America will wage war regardless. It's tragic.
7 replies →
Accusing someone of Trump Derangement Syndrome (TDS) is a rhetorical technique to pathologize dissent -- to call dissent a sickness, an irrationality. You did all but use the term. You're presupposing my anger at disastrous policy decisions as irrational to ignore addressing the critique directly. You're putting words in my mouth about Reagan, free trade, or perpetual war. I don't support "free" trade or "free" markets. I believe regulation is necessary, regulation, meaning to control the speed or flow of. Trade or Market's can't be free, only people can be free, and I believe in regulating markets and trade to promote freedom for people.
I don't support war, but I also don't support neutrality. Justice requires taking a side in conflicts. Without solidarity, taking a side in disputes and being willing to sacrifice for the benefit of others, justice cannot prevail.
You know you are literally supporting the policy of someone who is threatening Greenland, Canada, and Panama while also arguing against perpetual war right? Smashing trade relations is a prelude to performing actions our trading partners would disapprove of.
1 reply →
China can subsidize 10-20% tariffs for a few months. They CANNOT subsidize a 54% tariffs.
This will have COLOSSAL impacts on China.
They can't fix domestic real estate, subsidize industries, build their military, fund the Belt & Road, etc, etc with this level of tariffs from their largest customer.
The rest of the world will keep buying cheap stuff from China in increasing quantities.
Meanwhile things just got really expensive for people (and businesses) in the US as so much stuff is made in China.
Yes, it will hurt China. But it will hurt the US much more.
I think so too. They have been expanding pretty much everywhere. From Eastern Europe through South America and Africa. In the last COP climate gathering China gave a signal that they would take the leadership and also get on the "green tech" market i.e. export batteries, EVs, solar panels.
https://www.bbc.com/news/articles/c3rx2drd8x8o
Cool. What about our economy?
Are my eggs getting cheaper yet?
bravo, i like the current admin of the US
some say trump is the cause of the current state of the United States, well, in fact, trump is the result of the current state of the United States
This is the most important investment in our economic future in a generation.
I remember discussing with a Juniper guy back in 2008 or so about how Huawei would just rip off their designs. Back then it was conventional wisdom that China could just copy, not build. Now, Huawei can make state of the art routers with home grown chips. Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable. I don’t want my kids having to learn Chinese and become immigrants (as if China would even allow that) because we shipped the last shreds of our economy over there.
Putting tariffs on rivals that subsidize local industries has both a national security and economic (anti-dumping) justification.
Putting blanket tariffs on close allies has no justification and it harms the US in every respect, economic and security, short and long term.
Why limit it to national security or anti-dumping? Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
4 replies →
> Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable.
You're looking at this from a pretty jingoist perspective. Take it from another angle - what was Intel doing in the 60s and 70s that China couldn't copy in some guy's garage? What are American businesses exporting today that China has to copy to take for themselves? Why is globalism such a bad idea, why can't other countries copy our cheap cashgrabs?
You can't protect American businesses if they can't compete on their own merits. You can't demand that people respect your judgement if you reject the institutions of international justice. This is the starting gun into the foot of global trade that will leave America limping to the finish line.
> Why is globalism such a bad idea
Having grown up in the Rust Belt, it's a bit baffling to me that there are intelligent people out there who don't understand why it's a bad idea.
It's a race to the bottom. The jobs all go to countries where people are paid almost nothing to work 90-hour workweeks, safety and environmental concerns are not existent, and they have totalitarian political systems where anybody who complains about any of the above will be shot.
Said other countries have stronger economies which lifts their geopolitical influence and military power. You definitely don't want to give that to governments with those kinds of terrible value systems.
Part of our society's narrative is that anyone can join the middle class: "If you just work hard, you can get a good job, support a family and live a nice lifestyle." The companies formerly supporting that narrative moved their operations out of our country; those opportunities were never replaced. A narrative that binds our society together -- a fundamental part of the American soul -- is getting destroyed. Which is a big factor causing the terrible current political climate.
From the 1990's to today, a lot of Rust Belt places went from union blue to purple and then turned deep red in an instant in 2016 because somebody was finally acknowledging the problem.
8 replies →
> You can't protect American businesses if they can't compete on their own merits.
The problem is that “free trade” math defines lowered standards as “comparative advantage.” So any first world country that maintains first world standards is automatically unable to “compete in their own merits.” Globalism creates a race to the bottom.
7 replies →