Comment by piokoch
7 days ago
Yes... and no. Having own currency as a global reserve currency has its disadvantages too. For instance it keeps value of the currency high, what makes whole USA production noncompetitive. USA exports two things: internet services (all those Googles, Facebooks, etc.) and military equipment.
The problem is that internet services are making rich small group of people (owners, software engineers), military production is a niche, so there is a big group of people who lose jobs, are on low paying positions, as being, say, a car factory worker, does not bring enough money. Those people voted Trump, so Trump is trying to solve their issue by bringing back production back to USA, and the way to do this is twofold: make USD weaker and make foreign goods more expensive.
All this was not a problem till early '00, when USA didn't have much competition (basically Western Europe and Japan), but the times has changed and USA is seeing that. BTW this is not a Trump thing, Obama, Biden administrations were also noticing that and taking actions, like (in)famous Obama reset with Russia to be able to expand trade over there. "Pivot" to Asia - failed Biden project of Indo-Pacific, that was supposed to convince Vietnam and others to follow USA job regulations, what would make their products more expensive. Surprisingly, they told Biden to go away...
Another thing is that for years USA was in a sense donating European industry, for instance taxes on European cars in USA were 2%, while taxes on American cars in Europe (that is European Union) were 10%. Trump puts this to an end.
>Another thing is that for years USA was in a sense donating European industry,
Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.
Seems like this US leadership thinks it can both have its cake and eat it.
Tech giants have no competition in Europe and no capital to do so. In some ways, what Trump is doing is a call to arms for the EU to kick their economies into shape. We've been stuck in 0 growth for years, the UK is in a 0 growth trap since the GFC.
> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.
But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.
More people are in debt than have savings, the government itself included. Populism (of both left and right varieties) is surely associated with inflation.
You conveniently omitted the 25% tax on European light trucks and SUVs in the US. Which is the biggest car market segment.
The US has levied a 25% tax on imported light trucks since 1964, and 2.5% on passenger cars. The EU levies a 10% import tax on all cars from the US.