Comment by rayiner
17 days ago
> Consider actual tariffs? A trade deficit isn't a tariff or trade barrier it's just the natural flow of commerce from them selling more stuff than they buy
That’s just defining what a trade deficit is, it doesn’t explain why trade deficits arise. For example, other countries have cheaper labor and laxer environmental regulations. Simply looking at the country’s tariff rates on U.S. goods doesn’t account for the whole picture.
Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them?
Besides, if the trade volume is what determines the tariff, why would any country want to have a trade surplus with the US? The best solution for other countries is to artificially limit their exports, or find more reliable trading partners.
On the face of it that sounds reasonable, but then you look at say China with a 35x population over Canada yet Canadians don't just buy as much from China as vice-versa, they buy CAD$65 billion more. So I don't think the argument that larger countries necessarily have a deficit against their smaller trading partners holds water.
I do agree that this madness will only encourage other countries to conduct their trade elsewhere.
> Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them
Because the U.S. can buy from Uruguay only as much as 3.5 million people in that country can produce.
First we don't import any where near all of Uruguay's exports, in fact we're only about 8% of their actual exports which should tell you this isn't the reason we buy more from them than they do from us.
Next that's always going to be imbalanced because they produce goods cheaper and can't afford as much as the equivalent chunk of people in the US.
So, we aren’t factoring in natural resources and the different values they have either then?
Yeah sure, Europe is absolutely known for their lax environmental regulations…
GP said other countries, not "Europe". And Europe does have cheaper labor. Even in western europe you can find a 5x-10x difference in certain salaries especially in white collar industries.
Assume good faith.
> cheaper labor and laxer environmental regulations
So we've exported our worst paying, most environmentally damaging industries? I mean the rivers catching fire was probably exciting but I'm not exactly pining to bring that back...
Tariffs can only set those industries up for internal markets, other countries will just continue to buy from the cheaper source so the protected industry has to continue to be protected.
Additionally who's going to work these labor intensive industries? We're already at 4.1% unemployment, there's not vast masses of people waiting for low paying work as seamstresses and one of the other major prongs of the Trump ideology is reducing immigration drastically so we're going to squeezed on that end too.
Finally we've done mass tariffs before and it always ends badly. Remember Smoot-Hawley? it deepened the Great Depression because people thought they could turn to protectionism to prop up and bring industry to the US. It just doesn't work when broadly applied.