Comment by runako
15 days ago
A thought experiment. Imagine a small poor country far from the US, of 1 million people, where the average income is $3000 annually ($3 billion total household income). Imagine a factory in that country that produces shoes beloved in America.
Those shoes are so popular in America that Americans buy $1 billion of those shoes every year. In order to address the problem as stated, this hypothetical country would have to spend a third of its household income purchasing products produced in some of the highest-cost conditions in the world. To do so, they would have to shut out their local trading partners from whom they currently buy goods at prices they can afford. This would have the effect of making them even poorer.
Does this make any sense?
If you make an exception for this hypothetical country, then countries such as China would come in and build factories there and bypass their own tariffs. You're back to playing whack-a-mole.
I’m not talking about making an exception. I’m suggesting that a trade deficit can arise for reasons that have nothing to do with manipulation.
Also, the administration created the loophole about which you worry by creating a 24% tariff gap between China and the new 10% baseline for most countries.
Except that because the rule is clear, China will anticipate that doing this in another country will result in eventual increased tariffs. They will be able to see ahead that it's not worth making a big investment for that purpose. The optimal strategy changes to do more business with the US and/or build factories in the US.