USA has largest trade deficit in American history

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#1 Edited by Nuck81 (7409 posts) -

Despite Trump's tariffs, despite Trump's promise that he alone could fix american trade, the United States now has the largest trade deficit in the history of the country.

The biggest of which is our deficit with China, that has hit almost 500 billion dollars in deficit.

The only thing Trump did, was make foreign goods cost more to the American consumer.

MAGA!!!

http://amp.timeinc.net/fortune/2019/03/06/us-trade-deficit-record-high?utm_source=twitter.com&utm_medium=social&utm_campaign=social-share-article&__twitter_impression=true

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#2 Posted by mattbbpl (16977 posts) -

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#3 Posted by mattbbpl (16977 posts) -

To address the topic seriously: Can we all finally agree that the trade deficit fears are overblown?

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#4 Posted by watercrack445 (1433 posts) -

Because of this deficit with China, does america have to change its policy with china? If were going to enemies with china we would have to close the gap of our trade deficit with China. That is exactly what china is doing with america by dumping american bonds.

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#5 Posted by HoolaHoopMan (10598 posts) -

@mattbbpl said:

To address the topic seriously: Can we all finally agree that the trade deficit fears are overblown?

Half of the people here don't understand that deficit and debt aren't interchangeable words, and then we're supposed to have them understand the 'correct' definition being applied to an economic principle with respect to global trade?

lololololololol

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#6 Posted by mattbbpl (16977 posts) -

@HoolaHoopMan said:
@mattbbpl said:

To address the topic seriously: Can we all finally agree that the trade deficit fears are overblown?

Half of the people here don't understand that deficit and debt aren't interchangeable words, and then we're supposed to have them understand the 'correct' definition being applied to an economic principle with respect to global trade?

lololololololol

A guy can dream :-P

These kinds of topics are pretty awesome for that reason, though. There are enough smart/informed people here on just about any given topic to hold a conversation that we can learn from. It's a slow process, granted - and an often frustrating one. But it's also the most constructive thing that occurs on here.

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#7 Posted by HoolaHoopMan (10598 posts) -

@mattbbpl said:
@HoolaHoopMan said:
@mattbbpl said:

To address the topic seriously: Can we all finally agree that the trade deficit fears are overblown?

Half of the people here don't understand that deficit and debt aren't interchangeable words, and then we're supposed to have them understand the 'correct' definition being applied to an economic principle with respect to global trade?

lololololololol

A guy can dream :-P

These kinds of topics are pretty awesome for that reason, though. There are enough smart/informed people here on just about any given topic to hold a conversation that we can learn from. It's a slow process, granted - and an often frustrating one. But it's also the most constructive thing that occurs on here.

There isn't even a consensus on surplus/deficit being bad with regards to trade among economists. The entire argument rests on an assumption that isn't agreed upon. However, I'm willing to admit I'm not fully versed on the issue. I'd have to defer to people who actually know more than I do. Maybe start there?

As for Trump, he's assumed it awful and bad, therefore this increase is something that's cornered him in from a policy standpoint.

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#8 Posted by mattbbpl (16977 posts) -

@HoolaHoopMan said:

There isn't even a consensus on surplus/deficit being bad with regards to trade among economists. The entire argument rests on an assumption that isn't agreed upon. However, I'm willing to admit I'm not fully versed on the issue. I'd have to defer to people who actually know more than I do. Maybe start there?

As for Trump, he's assumed it awful and bad, therefore this increase is something that's cornered him in from a policy standpoint.

The biggest point of contention is that it's predicated on an increasingly false definition. Since supply chains are more and more multi-national in nature, "country of origin" has become nearly meaningless. Since "country of origin" is nearly meaningless, so are the trade credits and liabilities applied to them.

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#9 Posted by Nuck81 (7409 posts) -

@HoolaHoopMan: As for Trump, he's assumed it awful and bad, therefore this increase is something that's cornered him in from a policy standpoint.

Precisely.

Trump has the MAGA'S convinced that anything that doesn't say USA on it is unamerican and unpatriotic. These are the same MAGA'S that are on facebook sharing Russian Propaganda.

A trade deficit is a good thing for Americans. It means we get goods at a cheaper price which keeps more money in our pocket, which means we can spend that money on other things here in America.

Trump made this a signature issue in 2016, amazing how the trade deficit and the budget deficit are suddenly not a big concern for the "Fiscal Conservative" Until we get another Democratic President, then it will be back to being a major talking point.

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#10 Posted by SaltSlasher (997 posts) -

So we are importing more than we export? And the more you rely on other nations for your stuff the weaker/dependent you become?

The idea that most companies put factories outside of US to save money and avoid taxes, its kind of a lame that other countries making so much money off our own shit, but its kind of lamer that we we rely so much on others. I'm not a financial wizard I never went to Trump University, but what I imagine is that we need better rules. Tariffs sounded like great idea, I read something about how everything changed when we went from American Made to having China and shit do it for us for dirt cheap.

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#11 Posted by br0kenrabbit (15933 posts) -

@saltslasher said:

So we are importing more than we export? And the more you rely on other nations for your stuff the weaker/dependent you become?

The idea that most companies put factories outside of US to save money and avoid taxes, its kind of a lame that other countries making so much money off our own shit, but its kind of lamer that we we rely so much on others. I'm not a financial wizard I never went to Trump University, but what I imagine is that we need better rules. Tariffs sounded like great idea, I read something about how everything changed when we went from American Made to having China and shit do it for us for dirt cheap.

See here's the thing...if you really want America to be competitive in manufacturing again, the only way is to raise the middle class in other countries to the point where they are on par with the US. At that point, they'll be demanding the same wages as their American counterparts.

How to go about that, I don't know. But as they say: A high tide raises all ships.

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#12 Posted by joebones5000 (2094 posts) -

This clown has to go. No more republican nonsense. Too much damage.

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#13 Posted by SUD123456 (5285 posts) -

@mattbbpl said:
@HoolaHoopMan said:

There isn't even a consensus on surplus/deficit being bad with regards to trade among economists. The entire argument rests on an assumption that isn't agreed upon. However, I'm willing to admit I'm not fully versed on the issue. I'd have to defer to people who actually know more than I do. Maybe start there?

As for Trump, he's assumed it awful and bad, therefore this increase is something that's cornered him in from a policy standpoint.

The biggest point of contention is that it's predicated on an increasingly false definition. Since supply chains are more and more multi-national in nature, "country of origin" has become nearly meaningless. Since "country of origin" is nearly meaningless, so are the trade credits and liabilities applied to them.

I despise Trump as much as anyone, including most of his trade posture, but there is a piece of it that makes sense and it has nothing to do with supply chain and country of origin.

The part of his argument that does make sense relates to our changing perspectives around the basic international trade concept of comparative advantage. This has always been problematic with a portion of trade partners, but has taken on greater importance with the rise of China in particular and soon to be India.

When a huge trading partner does not have even reasonably similar standards around everything from patent protection, to labour laws, to environment laws, to currency manipulation, to a high degree of gov't owned enterprise etc.....one has to eventually ask whether many of these are natural comparative advantages or whether they are artificial advantages created through gov't manipulation?

And if we are shifting more of the difference from true comparative advantage to artificial advantage then I think it is correct to question the legitimacy of the 'free' part of free trade.

On the other hand, it does seem that sovereign debt, especially in the case of the US, may be irrelevant and close to unlimited. Afterall, the collapse in 2008 etc. has seemingly proven that the US can print money almost without end.

So on this point I do believe there is some degree of issue and that Trump is correct at least wrt to the morality underlying the trade equation. Whether that is actually material from a deficit and ultimately debt point of view i am still somewhat uncertain. But the one thing that I am pretty certain of is that ultimately the sustainability of this is predicated upon the US maintaining a productivity/innovation advantage. If that is lost then I think we might need to learn Mandarin in the West in general.

The one thing that gives me hope is that China is going to be in a serious problem as it's population begins to simultaneously age and decline in total size. The longer term issue is potentially India since they are in much better long term shape demographically. The thing that will keep them in check is their caste system. If they ever abandon that and join the modern world they will almost certainly climb the ladder and possibly rise to the top..

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#14 Posted by mattbbpl (16977 posts) -

@SUD123456: There are certainly issues - and a tariff-induced marginal increase in the topline numbers is a symptom of some. The topline numbers and presence of a deficit are meaningless as currently calculated.

Certainly the IP situation and corporate theft situations need worked out, and ideally we'd have an agreed upon standard for things like pollution, wages, and taxation. We just need to stop taking the XXX billion dollar trade deficit numbers as anything useful. At best they're useful for short term measurement of certain policy impacts and not much more.

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#15 Posted by Horgen (120131 posts) -

@SUD123456 said:

When a huge trading partner does not have even reasonably similar standards around everything from patent protection, to labour laws, to environment laws, to currency manipulation, to a high degree of gov't owned enterprise etc.....one has to eventually ask whether many of these are natural comparative advantages or whether they are artificial advantages created through gov't manipulation?

This falls under the "race to the bottom" doesn't it?

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#16 Edited by mattbbpl (16977 posts) -

@horgen: It does, but I think he's advocating for preventing it rather than increasing our pace to the bottom. He's just illustrating why a true deficit, perpetually, is an issue. And that's true.

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#17 Posted by comp_atkins (35580 posts) -

from an article written in 1998, interesting to see the parallels to today. 20 years later, debating the same thing.

basically it's an issue because people think it's an issue.

"When Americans buy imports, foreigners must do something with the dollars they earn. They can either use the dollars to buy American exports or to invest in American assets, such as Treasury bills, stocks, real estate, and factories."

https://www.cato.org/publications/commentary/are-trade-deficits-really-bad-news

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#18 Posted by SUD123456 (5285 posts) -

@mattbbpl said:

@horgen: It does, but I think he's advocating for preventing it rather than increasing our pace to the bottom. He's just illustrating why a true deficit, perpetually, is an issue. And that's true.

Yah. On related topics I have suggested that the approach to cutting corporate taxes in the US increases the race to the bottom and that none of this can be solved until there is some international tax harmonization agreement and closing of loopholes. I feel similarly wrt to this topic. Getting some degree of standards amongst major trading partners in the types of things I mentioned would be helpful in returning more of the balance to true comparative advantage instead of artificial. So I do believe the Trump has raised some legit points in this area, but I am not suggesting the US should respond the way he has. The problem is you have a major actor in China that is inherently a market manipulator.

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#19 Posted by HoolaHoopMan (10598 posts) -

@SUD123456 said:
@mattbbpl said:

@horgen: It does, but I think he's advocating for preventing it rather than increasing our pace to the bottom. He's just illustrating why a true deficit, perpetually, is an issue. And that's true.

Yah. On related topics I have suggested that the approach to cutting corporate taxes in the US increases the race to the bottom and that none of this can be solved until there is some international tax harmonization agreement and closing of loopholes. I feel similarly wrt to this topic. Getting some degree of standards amongst major trading partners in the types of things I mentioned would be helpful in returning more of the balance to true comparative advantage instead of artificial. So I do believe the Trump has raised some legit points in this area, but I am not suggesting the US should respond the way he has. The problem is you have a major actor in China that is inherently a market manipulator.

Seems to me that we have a collective action issue then. Plenty of people decry the thought of international policing bodies, even if it pertains to trade only. Do we provide the WTO with some fangs or start gathering forces to isolate bad seeds? There needs to be a system to effectively punish and enforce these types of behavior.

As it stands, companies and consumers are still choosing China knowing full well they are promoting behavior that isn't in our best interest (on a macro scale). Recent reports indicate that companies themselves weren't willing to take a firm stance against Chinese cyber intrusions. Companies know there's a problem but we expect others to fight that battle for them since it would hurt their immediate bottom line.

I'll admit that I don't know the answer.

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#20 Posted by mattbbpl (16977 posts) -

@HoolaHoopMan: "Seems to me that we have a collective action issue then."

I would agree with that.

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#21 Posted by Horgen (120131 posts) -

@SUD123456 said:
@mattbbpl said:

@horgen: It does, but I think he's advocating for preventing it rather than increasing our pace to the bottom. He's just illustrating why a true deficit, perpetually, is an issue. And that's true.

Yah. On related topics I have suggested that the approach to cutting corporate taxes in the US increases the race to the bottom and that none of this can be solved until there is some international tax harmonization agreement and closing of loopholes. I feel similarly wrt to this topic. Getting some degree of standards amongst major trading partners in the types of things I mentioned would be helpful in returning more of the balance to true comparative advantage instead of artificial. So I do believe the Trump has raised some legit points in this area, but I am not suggesting the US should respond the way he has. The problem is you have a major actor in China that is inherently a market manipulator.

You would have trouble finding or creating an organ that can hold countries responsible. And countries willing to to give up that part of their self control.

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#22 Posted by Kadin_Kai (320 posts) -

Yes, the US tariffs on imports has truly backfired against everyday Americans.

This was expected by some economists, since Chinese people are much more price sensitive than Americans (per capita income in China is much lower than America). Plus Chinese people are relatively more nationalistic which has pushed some to boycott American goods or find alternatives.

Also, Trump failed to recognise that Chinese can replace many US exports while it would be hard for Americans to find alternatives.

For example, China reduced soya bean imports from the US and purchased more from South America. Now Russia is clearing land and growing soya beans for the 2019 season.

However, Americans cannot buy a not-made-in-China smartphone/TV/solar panels/washing machine and etc.

For these to be American made, it will take a lot of time and money (retraining people, building and opening factories, building roads, ports and etc). And what is produced at the end will be more expensive.

However, Trump is right (I hate to admit it) in some respects. China has developed very quickly and enriched itself. So it is probably time that trade deals should be renegotiated.

However, the way Trump has gone about the trade negotiations has caused bad blood between the US and many countries around the world.

Trump went in hard with tariffs against China, Japan, South Korea and the European Union and has hurt themselves more.

What America really needs to understand is that countries will rise and they will fall. America has led the world since WW1 and now its dominance is declining.

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#23 Posted by sonicare (56645 posts) -

Each successive year is the largest trade deficit in history.

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#24 Posted by SUD123456 (5285 posts) -

@horgen said:
@SUD123456 said:
@mattbbpl said:

@horgen: It does, but I think he's advocating for preventing it rather than increasing our pace to the bottom. He's just illustrating why a true deficit, perpetually, is an issue. And that's true.

Yah. On related topics I have suggested that the approach to cutting corporate taxes in the US increases the race to the bottom and that none of this can be solved until there is some international tax harmonization agreement and closing of loopholes. I feel similarly wrt to this topic. Getting some degree of standards amongst major trading partners in the types of things I mentioned would be helpful in returning more of the balance to true comparative advantage instead of artificial. So I do believe the Trump has raised some legit points in this area, but I am not suggesting the US should respond the way he has. The problem is you have a major actor in China that is inherently a market manipulator.

You would have trouble finding or creating an organ that can hold countries responsible. And countries willing to to give up that part of their self control.

We already have the WTO/GATT which has been pretty successful in various trade disputes. And there is the LCIA as an example of arbitration. All trade agreements require some give and take on the individual participating countries and there are many trade agreements. So this can be done, but obviously it won't be easy. But first, nations need to get a grip on the reality of multinational corporations.

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#25 Posted by SUD123456 (5285 posts) -

@kadin_kai said:

Yes, the US tariffs on imports has truly backfired against everyday Americans.

This was expected by some economists, since Chinese people are much more price sensitive than Americans (per capita income in China is much lower than America). Plus Chinese people are relatively more nationalistic which has pushed some to boycott American goods or find alternatives.

Also, Trump failed to recognise that Chinese can replace many US exports while it would be hard for Americans to find alternatives.

For example, China reduced soya bean imports from the US and purchased more from South America. Now Russia is clearing land and growing soya beans for the 2019 season.

However, Americans cannot buy a not-made-in-China smartphone/TV/solar panels/washing machine and etc.

For these to be American made, it will take a lot of time and money (retraining people, building and opening factories, building roads, ports and etc). And what is produced at the end will be more expensive.

However, Trump is right (I hate to admit it) in some respects. China has developed very quickly and enriched itself. So it is probably time that trade deals should be renegotiated.

However, the way Trump has gone about the trade negotiations has caused bad blood between the US and many countries around the world.

Trump went in hard with tariffs against China, Japan, South Korea and the European Union and has hurt themselves more.

What America really needs to understand is that countries will rise and they will fall. America has led the world since WW1 and now its dominance is declining.

Some good points.

But the most important is that Yuan simply fell in relation to the $US. Which is to be expected, especially since the Chinese gov't has more control over its own currency. Meaning close to half the tariff is irrelevant since the cost of Chinese imports in the US fell by at least 10% last I checked.