"Trade deficit" is a misnomer

When Trump describes our trade deficit with China -- $375B, not $500B -- he is implying it is a monetary deficit. In other words, he is communicating to his base -- he is not concerned about the other 70% of Americans -- that we are losing on an annual basis $375B/year to our dreaded trade foe, China.

Nothing could be farther from the truth. A few facts are in order.

We have the largest economy in the world, nearly twice that of our nearest competitor, China. We have full employment. Because of our vibrant economy, far more consumer goods are sold in the U.S. than any other country, including China. Forbes reports that Americans spent $9.1B on Halloween last year.

With that kind of consumer spending, it stands to reason we will run trade deficits with other individual nations. We buy a lot more than they do.

With respect to China we are not losing $375B/year as Trump would have us believe.

We are receiving goods for the $375/year, goods that play a significant role in our powerful economy.

Trump likes to argue we are losing jobs because of the trade deficit.

How is that possible? We have full employment.

Some say we have lost manufacturing jobs. That is Trump's main thing, and to some extent that is true.

So is this. With an index of 100, China is No. 1 in manufacturing. The U.S. is No. 2 with an index of 99.5. A new study on future global competitiveness, by Deloitte Global and the U.S. Council on Competitiveness, predicts that the U.S. will dislodge China as the most competitive manufacturing nation in the world in 2020.

These are facts that Trump is not telling his base. Of course, he is not telling these facts to Americans as a whole. Part of the reason he does not want Americans to know the truth is that he is about to destroy this rosy picture with his liberal protectionist tariffs.

The looming May 1 deadline is fast approaching. The exemptions for our friendly trading partners, the EU, Canada, Mexico, Australia, Argentina, and Brazil, will run out on May 1 and Trump's 25% tariff on steel and 10% tariff on aluminum will be imposed. It is extremely likely that will severely impact our economy in a negative way.

Trump's own party, economists, S&P 500 companies, Wall Street traders are telling Trump to forget the tariffs. The tariffs could cause him to lose part of his own constituency, farmers.

Through it all Trump is saying nothing. He is not even trying to justify the tariffs. That is a sure sign of a weak President. He cannot even support his own policy.

These links helped with this report:
https://www.google.com/imgres?imgur...hUKEwj91teWodnaAhVYHGMKHamXBdwQ9QEwAHoECAAQLg
http://www.industryweek.com/competitiveness/top-10-manufacturing-countries-2020
https://www.weforum.org/agenda/2017/03/worlds-biggest-economies-in-2017/
http://www.dw.com/en/germany-expects-us-metals-tariffs-to-come-into-force-may-1/a-43545105
http://thehill.com/business-a-lobbying/379417-industries-unite-in-battle-against-trumps-tariffs

 

That's not a "report", it's an economic opinion. At worst, it's a sham.

"Full-employment" and unemployment numbers are based upon who is ACTIVELY seeking work. It was created during the 1940s, a time when men worked and most women stayed home.

We now have approximately 95 MILLION people that have dropped out of the workforce in recent years, and now at particpation rates not seen since the late 1970s. And WAGES HAVE STAGNATED. That's a clear indication there are more people seeking work than available jobs.





Steve

 

You questioned four words in my article and concluded the whole article is a "sham." I am guessing you did not want to deal with the essence of the article -- Trump is leading us into an economic disaster. He can't even defend his tariff policy.

I have been searching daily for weeks for some comment from him regarding the tariffs. There are countless arguments against the tariffs, but not a word from Trump. You avoided the issue as well, and decided on dealing with four words, "We have full employment."

Regarding those four words, I will admit there is an argument that can be made that we are not at full employment, largely because of the work participation rate. However, the low work participation rate was expected as Baby Boomers join others like myself (I was born in 1943) on the retirement rolls. This combines with the inescapable fact that Americans are living longer. There are more retirees than ever before in our history.

I considered all this when making that statement and decided to agree with the Federal Reserve Bank. "The Fed says we are at or near full employment - they have been saying it for over a year." https://seekingalpha.com/article/4158624-really-full-employment

You may disagree. Fine, now deal with the intent and the important message of the article, not just four words in it.

 

No, it is you who doesn't have a clue about economics or international trade.

You even thought you could finally reply waiting 6 hours later thinking I wouldn't respond.

The fact there are 95 MILLION people no longer in the workforce is DIRECTLY TELLING YOU jobs have left the country. The workforce participation rate is now at levels NOT SEEN SINCE the late 1970s. In other words, people can't work if there are no jobs. They won't even try to find work when there are no jobs. And there are likely those who won't try to find work that pays less money than they made in years past when WAGES STAGNATE.



Can you read a Bureau of Labor Statistics chart?

Sheeeesh!
Steve

 

You are impressed with yourself. I am active on several threads, many of my making. I don't have time to reply to everyone. You should be thankful I replied to you. You are blessed.

No I can't. Can you? What are the dates? You failed to provide a link to the chart so I could examine it.

You are spending all this time on four words in the article. I already said there was validity to your argument. I went with the Fed that claims we are at full employment.

What about the rest of the article? I guess you agree with what I said.

 

You can’t even argue the basics of employment/unemployment and how those numbers are obtained.

I have no reason to believe that you could possibly argue the more complex aspects of trade and the relationship of trade balances between multiple countries. I have a bachelor’s degree in economics with additional work at the master’s level. I have experience in economics and written a published book in 2001 on this subject. You on the other hand are spouting sources of demagogic prattle and opinions meant to embarrass Trump.

The U.S. Bureau of Labor Statistics has data tables, no completed graphs to show. You request the specific data set timetable and then the BLS will produce it for you. The one above was created in 2015 and goes back to the 1940s when the BLS first began their data. It clearly shows people no longer in the workforce that were in the workforce in the 1990s, but then NAFTA and other trade agreements began sending JOBS elsewhere.

I’m sick and tired of repeating myself while you try to save your reputation here by posting more liberal propaganda and crap.

Steve

 

Not to confuse the issue, but it seems to me that most jobs, lost over the past 3 decades or so, have been lost to automation, computerization and consolidation. Also, a great deal of the "trade deficet" is actually US companies having their products made in China - a direct consequence of the Walmartization of the US.

 

Then don't. Deal with the issues raised in the OP, not just four words.

You can't can you, despite your stated background? You are attacking me personally instead of the issues I raised. You are making yourself look very foolish.

 

2015! Yeah, I thought so. A lot has changed since 2015, particularly when it comes to the work participation rate. Someone with your stated background should have known that.

In terms of the WPR, that's it I won't address the issue again. If you wish to continue this conversation, deal with the matters in the OP.

 

You are too ignorant to even discuss the "more complex issues of trade and the relationship of trade balances between multiple countries." I'm not here to teach economics, but I damn sure will continue to make you look foolish and ignorant of the issues.

Steve

 

What you said conflicts with facts. I am not talking about three decades. I am talking about now. Trump's tariff policy is based our '70's and '80's economy.

We have the largest economy in the world, nearly twice that of our nearest competitor, China. We have full employment, according to the Fed.

With an index of 100, China is No. 1 in manufacturing. The U.S. is No. 2 with an index of 99.5. A new study on future global competitiveness, by Deloitte Global and the U.S. Council on Competitiveness, predicts that the U.S. will dislodge China as the most competitive manufacturing nation in the world in 2020.

Because of our vibrant economy, far more consumer goods are sold in the U.S. than any other country, including China. Forbes reports that Americans spent $9.1B on Halloween last year.

With that kind of consumer spending, it stands to reason we will run trade deficits with other individual nations. We buy a lot more than they do.

With respect to China we are not losing $375B/year as Trump would have us believe.

We are receiving goods for the $375/year, goods that play a significant role in our powerful economy.

Would you rather we not receive those goods? Would you prefer inflation caused by higher prices? Would you prefer higher unemployment caused by higher prices.

As prices go up, demand goes down. Econ 101.

More importantly, is that what Trump wants? It would seem so. That is why he can't defend his tariff policy. It is wrongheaded.

 

Yeah, best get out while you're behind.

 

You can’t even argue the basics of employment/unemployment and how those numbers are obtained.

I have no reason to believe that you could possibly argue the more complex aspects of trade and the relationship of trade balances between multiple countries. I have a bachelor’s degree in economics with additional work at the master’s level. I have experience in economics and written a published book in 2001 on this subject. You on the other hand are spouting sources of demagogic prattle and opinions meant to embarrass Trump.

The U.S. Bureau of Labor Statistics has data tables, no completed graphs to show. You request the specific data set timetable and then the BLS will produce it for you. The one above was created in 2015 and goes back to the 1940s when the BLS first began their data. It clearly shows people no longer in the workforce that were in the workforce in the 1990s, but then NAFTA and other trade agreements began sending JOBS elsewhere.

I’m sick and tired of repeating myself while you try to save your reputation here by posting more liberal propaganda and crap.

Steve

 

I will simply this argument to the nuts and bolts.

Since you object to China paying higher taxes, then you must agree that the rich should not pay higher taxes as well.

And you handed the argument supporting me on a silver platter.

 

Prior to Trump, China was slapping us silly with their tariffs against us.

https://www.privacyshield.gov/article?id=China-Import-Tariffs

China - Import Tariffs
Includes information on average tariff rates and types that U.S. firms should be aware of when exporting to the market.
The Customs Clearance Handbook (2016), compiled by the General Administration of Customs (China Customs), is a comprehensive guide to China’s customs regulations. This guide contains the tariff schedule and national customs rules and regulations, and can be purchased at bookshops in China or ordered from the following online bookstore

Tariff Rates

China Customs assesses and collects tariffs. Import tariff rates are divided into six categories: general rates, most-favored-nation (MFN) rates, agreement rates, preferential rates, tariff rate quota rates, and provisional rates. As a member of the WTO, imports from the United States are assessed at the MFN rate. The five Special Economic Zones, open cities, and foreign trade zones within cities offer preferential duty reductions or exemptions. Companies doing business in these areas should consult the relevant regulations.

China may apply tariff rates significantly lower than the published MFN rate for goods that the government has identified as necessary to the development of a key industry. For example, China's Customs Administration has occasionally announced preferential tariff rates for items in the automotive, steel, and chemical sectors.

 

This is why tariffs are not a meaningful negotiating tool.

Unless the exemption is extended, or made permanent, the tariffs could spark a new trade fight between Europe and America, hurting business, the economy and jobs.

"We continue to be in constant contact with the US administration," a spokesperson for the European Commission said this week. "We expect a permanent and unconditional exemption from the US tariffs."

If it doesn't get want it wants, the European Union stands ready to retaliate. It has already published a list of hundreds of American products that it could target if Trump moves forward with the tariffs. The list runs to 10 pages and includes US cigarettes, sweetcorn, ovens, sailboats, lipstick and stainless steel sinks.

The response from Europe could come within days.

"Our expectation remains to be exempted, but we are ready if necessary," said the Commission spokesperson.

http://money.cnn.com/2018/04/27/news/economy/us-tariffs-eu-response/index.html

If Trump doesn't back down, investors have one day to get their money out of stocks. Traders are not looking forward to Monday, the 30th.

 

There may be hope yet that Trump will realize the stupidity of his tariffs.

CNBC reports, "The May 1 deadline for steel and aluminum tariff exemptions for U.S. allies is likely to be extended, according to sources who have been in discussions with the Trump administration."

But, there is something strange about this report. It is possible Trump is playing games again. He goes from controversy to controversy, changing his mind, changing it back, saying one thing while his staff says something else. This is how he runs the White House. It is his management style.

Of course, nearly everyone agrees his management style sucks. That accounts for the 45% turnover rate in the White House. Some of his management choices don't even make to their first day before they quit.

As for the exemptions, the White House, the Commerce Department and the National Security Council did not respond to requests for comment before publication. Of course.

My guess, the leak came from Trump himself. He still thinks he is the host of a reality show. It is his management style.

 

Robert China doesn't pay the higher taxes. The American consumer will in the form of higher prices.

Another one who voted for Trump.

 

We have the largest economy in the world, nearly twice that of our nearest competitor, China. We have full employment, according to the Fed.

With an index of 100, China is No. 1 in manufacturing. The U.S. is No. 2 with an index of 99.5. A new study on future global competitiveness, by Deloitte Global and the U.S. Council on Competitiveness, predicts that the U.S. will dislodge China as the most competitive manufacturing nation in the world in 2020.

Because of our vibrant economy, far more consumer goods are sold in the U.S. than any other country, including China. Forbes reports that Americans spent $9.1B on Halloween last year.

With that kind of consumer spending, it stands to reason we will run trade deficits with other individual nations. We buy a lot more than they do.

Tell me, Robert, what exactly is the problem? You told us a fact. I am giving you results, and the results are very good. What are you complaining about?

 

I responded to your whining.

I notice you chopped off the part that discloses that for many years, China has imposed Tariffs on this nation of ours. But when Trump imposes them, you commence to whine.

 

I voted for the winner which is more than you can say to the forum. I often point out the US corporations also do not pay taxes since they simply imbed them in prices charged to consumers. I understand taxing by the USA very very well.

So since you admit it will not harm China, why keep whining?

What specifically have you bought from China in the way of Aluminum or steel since Trump took office?

 

That is not a problem. That is a symptom. The problem would be if this severely restricted our economy and caused unemployment. But that is not true. By far, we have the largest economy in the world, and we have full employment according to the Fed.

You are using circular logic. Fact, "China has imposed Tariffs on this nation of ours." Problem, "China has imposed Tariffs on this nation of ours."

However, if you had been following along, I have not been talking about China lately. I have been addressing the steel and aluminum tariffs Trump wants impose on our friends and allies on May 1. I can understand you not wanting to talk about that.

 

There seems to be a pattern here.

On March 8 Trump spontaneously agreed to talk to the North Korean dictator based solely on the statements of a South Korean envoy. He did not consult his state department, National Security Council, or our intelligence services. Since then he has said a great deal about all the progress that has been made even though that progress has been mere rhetoric.

April 18, “If I think that it’s a meeting that is not going to be fruitful, we’re not going to go,” Trump said at a news conference at his Mar-a-Lago estate in Florida, standing alongside Prime Minister Shinzo Abe of Japan. “If the meeting, when I’m there, is not fruitful, I will respectfully leave the meeting.” He has begun laying the groundwork for changing his mind. As everyone else knows, Kim is not giving up a thing. He may give up testing, but that is only because he has the weapons he needs and they have passed the rigorous testing.

March 1, speaking at the White House, Trump said he has decided on tariffs of 25 percent for foreign-made steel and 10 percent for aluminum. “We’ll be imposing tariffs on steel imports and tariffs on aluminum imports,” the President said. “…You will have protection for the first time in a long while, and you’re going to regrow your industries.”

March 8, in his formal announcement of the tariffs, he exempted Canada and Mexico, nos. 1 and 2 steel exporters to the U.S.

The tariffs were to into effect on March 23. On March 22, Trump exempted Australia, Argentina, South Korea, Brazil, and the member countries of the EU. Those exemptions end April 30.

On April 27, CNBC reported, "The May 1 deadline for steel and aluminum tariff exemptions for U.S. allies is likely to be extended, according to sources who have been in discussions with the Trump administration."

January 12, “Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies’ agreement to fix the terrible flaws of the Iran nuclear deal,” Trump said in a statement. “This is a last chance. In the absence of such an agreement,” he went on, “the United States will not again waive sanctions in order to stay in the Iran nuclear deal.” The deadline for the Iran nuclear deal was set for May 12.

April 27, U.S. Secretary of State Mike Pompeo said Trump has not made a decision on whether to pull out of the Iran nuclear deal but was not likely to keep to it without substantial changes. "There's been no decision, so the team is working and I am sure we will have lots of conversations to deliver what the president has made clear," Pompeo told a news conference.

April 29, National security adviser John Bolton said Sunday Trump still hasn't decided whether to leave the Iran nuclear deal ahead of his May 12 deadline.

It is patently obvious both Bolton and Pompeo are simply ignoring what Trump has said.

Conclusion: Trump is big blowhard. His threats mean nothing. His orders mean nothing. There is little doubt that more and more Trump is simply being ignored.

 

Not necessarily. A producer in China can chose to absorb the tariff. There are many variables involved, which include the ability of the producer to sell elsewhere.

 

Oh good grief. I toss you meat and you fluff your skirt and toss back feathers.