Correct me if I am wrong here, but I think a non democratic country like China will always have the upper hand in trade wars against a democratic one like the US, all else being relatively equal. They can always target politically sensitive agricultural produce in the swing states. I think the farmer vote in the US is quite significant. And the Chinese government does not need to worry about elections in the short term.
I think that all democracies will need to find a defense against this sort of pressure, and that democracies could just as well wield this pressure against another similar state.
Off course, but states with two party alternative rules and a small number of deciding constituents (swing states) are more susceptible to such pressures.
China's leaders have enough money, they could hunker down for a decade and not export anything and still be successful. The people would starve, and there'd probably be some put out of there misery, it'd be a humanitarian nightmare, but China is a dictatorship and will wither the storm better than we will, and face it America will cave as soon as we have a competent leader who repeals the tariffs and fixes our geopolitical status.
You'd rather see your own country go into economic depression than Trump's decision working out? How are you so certain that tariffs on China are a bad idea?
Tariffs lead to market inefficiency and failures. I’m only voicing statistical likelihood. People also largely vote based on the economy - which is itself its own falsehood, but beside the point.
The thing I would like to see is Trump, the extremist right wing, and Russian influence driven from power.
Unfortunately, this guy is also the slippery character that always chickens out before he meets his fate. Someone will eventually convince him tariffs will push him out of power and he’ll reneg. He is the pathological case that leads the self balancing system to destruction.
how do you know trump wants to remain in power? I'm not even sure he really wanted elected. I think it was possibly a stunt to get more views for his shows, or possibly to drum up business for his interests. Might be, he's doing this to piss people off, and get unelected fast. If that's the case, then he's doing just what he needs to do to get kicked to the curb.
I agree that Trump is a Russian agent, it's more than clear at this point.
Economically though, the same theories that say that tariffs are economically inefficient say that running a $400 billion trade deficit for twenty years straight should be impossible. If you go back to first principles and some basic economic observations, it's fairly obvious that the trade policy of the U.S. over the past 40 years has not served the interests of a large majority of the American public, i.e. it is economically inefficient from the U.S. perspective. Trump wasn't elected by Putin, even if Putin did push him the last few yards over the goal line. If the Democrats are going to win, they need to be the party of truth and standing up for all Americans instead of just opposite-day Trump.
Economically though, the same theories that say that tariffs are economically inefficient say that running a $400 billion trade deficit for twenty years straight should be impossible.
That's not true. Consider this: how much money have you paid to your dentist over your lifetime? How much has your dentist paid you? There's a pretty big trade deficit there, no? How is that even possible? Of course the answer is looking at trade bilaterally misses the big picture. You and your dentist are part of a larger economy with myriad flows of money. It's that larger economy that allows money from the dentist to flow back to you, even though it's not being tracked in the bilateral scenario.
The same is true at the nation state level. Trade shouldn't be looked at from a bilateral perspective, but from a comprehensive perspective - looking at the world economy.
Not to mention the other problem with these trade numbers: they capture the trade of 'goods.' You may be surprised to learn that the UN Convention on Contract for the International Sale of Goods excludes items bought for personal use (e.g. toothpaste) and aircraft. Which means a lot of the items the U.S. ships to China, think Boeing aircraft and Intellectual Property such as software and movies, are not captured in these deficit numbers. So there's that.
Remember the old adage figures don't lie but liars figure? Nowhere does that apply more than the myopic analysis of trade deficits.
Nope. The trade deficit is usually denominated in both goods and services, and those are the numbers I'm using.
I'm not talking about the dentist either. I'm talking about the overall U.S. trade deficit, not just with China. China is a very big component, but it's not the only one, and China is not the dentist that you see once a year, it's 1.3 billion people, and their products are pervasive on store shelves.
If your response is that doing math is not a legitimate means of economic argumentation, I'm not sure what school of economics you're representing... The myopia is certainly not coming from my side.
My understanding is that a trade deficit is equivalent to an investment surplus. So a long-running trade deficit just means foreigners have been investing on net in the US for a long time.
One day the President is complaining about the trade deficit and the next he's saying the US needs more foreign investment. I don't think you can coherently hold these grievances together. But if foreign investment is good right now, then the trade deficit must be good.
The name for the variable that offsets the trade deficit is called "investment", but that doesn't mean it's really an investment. Some people say that they're taking on debt to invest in an education. My brother-in-law also once said he was "investing" in a new 60 inch TV, paid for on a credit card.
The U.S. is using debt to pay for current expenses. This is enabled by this foreign investment. Roughly, China's offer over the past twenty years has been the following: "You guys are pretty good at making things, but we're young and hungry for the job. You go home and relax while we do your job, and we'll just loan you the money you would have earned. Good deal, huh?"
The only problem is that eventually they will start seeing us as a bad credit risk, stop loaning the money, and we're left with a pile of debt, some broken appliances, and no recent skills. They wind up with some bonds that they may have to write off, and a highly skilled workforce and a huge industrial base.
My knowledge of these topics isn't very deep. But the fact that the deficit is in USD should make this case different. The US is overspending in a resource that it has complete control of, so the impact of that behavior should be quite different from what a typical borrower would experience.
It's not like the US can just print more money when it needs it, it needs to raise taxes to account for money, to put money in it's bank account. Printing more money can upset the scales of deflation/inflation.. I'm not an economist, so can't say more than that.
There are other countries with a higher debt/GDP ratio, so I'm not sure what facts lead you to assume the US is the sort of outlier that demands a special explanation. The number $20T does not seem meaningful in a vacuum.
Reality is also not economic theory. Economic theory won’t lead you to becoming the government of the world sans title. But that’s largely what the US obtained following its decades long of economic market expansion through trade agreements.
US debt is literally people who have agreed to take US currency in the future and are not themselves part of the US.
"US debt is literally people who have agreed to take US currency in the future and are not themselves part of the US."
I don't think this is true. Foreign holders of US federal debt are only about 6 trillion of 21 trillion[1]. Most of it is held by the government itself or the American public.
The U.S. used trade agreements to achieve a number of diplomatic outcomes in the post cold-war era, including closeness to Europe and China, to keep Soviet influence down. The Soviet Union doesn't exist anymore though, and China is certainly no longer our ally against them. Europe's economy doesn't need us to provide a one-sided market for their exports anymore to juice their economy either. The purpose of that was to keep them from going red. Putin notwithstanding, that's not very likely anymore.
While most of what he says is random and unreliable; His words on trade have been consistent and had follow through. I'd put the chances of it happening at close to 100% unless China capitulates or Congress blocks him.
