Why is there a trade deficit with a country if there aren’t trade barriers or other unfairness, such as China’s weaker labor laws and environmental laws? Mathematically, “free trade” treats those things as a “comparative advantage” but we don’t have to pretend that reflects reality.
The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero. It also escalates the tariffs as the trade deficit goes up, and reduces them as the other country imports more of our goods. It’s an elegant formula.
Because it's not a barter economy and you would not naturally have equal dollar quantities of goods to buy from and sell to each trading partner individually.
One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage. What goods/services are they going to buy from the US that they cannot get from more local trading partners cheaper? They can import grains more cheaply from nearby neighbors. Southeast Asia is not going to start buying Teslas & Fods, they are driving around in Suzukis and whatever China makes.
You spend $5/week at your baker, does your baker buy $5/week of software from you?
> One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage.
But it’s insane that “cheap labor” is considered a “comparative advantage.” Free trade punishes Americans for their high standards of living, forcing American labor to compete with cheap foreign labor. The whole point of these tariffs is to take that out of the equation.
Yes this is the inherent tension some miss with "we can just tariff them".
If it's some dirty industry we outsourced 50 years ago, its probably work no one here wants to do, and is being done for $3/hr. What tariff rate will make comparable say.. $15/hr US labor work? None because even if they get rid of EPA and tariff to 1000%, those jobs are only coming back via 1 guy operating 10 robots.. not as 10 jobs.
And then for more advanced industries - look at how much trouble say Intel is having or how long it took TSMC to spin up an AZ fab. You need long lead times with low economic/political volatility in which to plan and implement these 5+ year projects.
Look at how slow moving automaker supply chains are, are they bringing back jobs for 2030 production if they have no idea what the world is going to look like then?
Oh and don't forget the PHD Trump sane washing explainers favorite fallback - hey it's all just a negotiating trick to get leverage. OK so then, again, what business leader is making investment decisions in that context?
So you would support criminal proceedings against American farmers/constructions companies/meat packers for using undocumented immigrant labor and punishing Americans for their high standards of living? If we are going to cause all this pain, funny ZERO policy has been about going after these groups of law violators.
Free trade allows Americans to live a higher standard of living. All the goods we buy from foreign countries are cheaper which lets us spend our money on additional things.
The issue though it’s very tricky to compare these things. We have very high wealth inequality, and very low house affordability and complicated medical insurance. This all contributes to lower quality of life in the end. And what’s even more important Americans now live worse than Americans in 90s. And this is a problem, and globalism might played some role in it.
> The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero.
I don't see why you would expect that.
Consider a rich country that mostly exports expensive manufactured technological things. It imports one of the natural resources it needs for this from some poor country that is mostly poor farmers and the poor laborers who extract that natural resource they export.
Its hard to see a way for the rich country to not have a trade deficit with the poor county. Even with what the poor country makes from exporting their natural resources they are unlikely to be able to afford the items the rich country makes.
Or consider two countries that are both rich and have about the same population but have different tastes. Say in country X 90% of the population likes big SUVs and trucks and only 10% like small cars. In country Y it is 90% who like small cars and only 10% like the big ones.
A car maker that has factories in both countries could find it more efficient to have an SUV/truck factory in X that makes the trucks for both countries and a small car factory in Y that makes the small cars for both countries than to have both an SUV/truck and a car factory in each country.
But since the big SUVs and trucks cost more than the small cars Y is going to have a trade deficit in cars with X.
Okay, that's a nice econ textbook hypo that explains the trade deficit with Bangladesh. But why do we have huge structural deficits with the EU, Japan, China, etc? Those are big, diversified economies. You'd think those factors would average out.
Germany is a big, rich economy. How do they manage to run large trade surpluses? They seem to do this quite deliberately. So why is it a bad idea to try and make our economy more like Germany’s? Japan has a large trade surplus. The EU as a whole is basically evenly balanced, tending towards a small surplus. Are our Reaganite overlords smarter than the guys who run those countries?
Cars is a big part of it with Japan. I'd expect that even if all other things were equal Japanese consumers would prefer Japanese cars for the same reason a lot of American consumers prefer Japanese cars: companies like Toyota and Honda are really really good at cars.
I've got way more confidence that I can buy a newly released revision of a Honda and get a car that won't be a lemon and that I can keep running well for 20+ years if I wish with reasonable maintenance than I do for American car companies.
It's not an American worker vs Japanese worker thing. 70% of Hondas and 100% of Acuras sold in the US are built domestically and for the models that are made in both countries there is no significant difference in quality.
The American companies have been improving, to the point that when I decide to replace my nearly 20 year old (and still running great) Honda CR-V the Chevy Equinox EV will be a contender. The new Chevy Bolt will probably be a contender too, especially if they get it out before the federal tax credits go away. 10 years ago this would have not been the case.
Another part of it is the dollar is stronger than the yen. Japan has been accused of trying to keep the yen low but even if they are and they stopped it still will probably be weaker than the dollar.
The strong dollar isn't just a factor in trade with Japan. The dollar being the global reserve currency makes that a factor with nearly everyone else.
For agriculture and food products a lot of countries have stricter health and safety regulations. If an American company needs to put in extra work to make their exported products meet those standards that can make them more expensive and cut demand. The foreign food companies on the other hand are already making their products to meet their stricter domestic standard so it is no extra work to meet US standards.
Is Japan's trade deficit with Australia a good or bad thing? Is Australia ripping off Japan?
The trade deficit is a good thing for Japan because Japan lacks the natural resources it needs as inputs into its industry. It happens to buy those resources from Australia due to comparative advantage.
If Japanese policymakers tried to create a trade surplus with Australia via tariffs, they would make Japan significantly poorer and weaker.
The premise of the formula is flawed. There is nothing inherently unfair about a trade deficit between two countries. There's not necessarily anything nefarious going on if the United States doesn't buy the same amount of goods from Botswana as they might purchase from the United States within any particular year.
I mean, if me and my neighbour both print currency on our home laser printers and buy goods from each other, am I being taken advantage of when I end up with more goods and he ends up with more paper?
If you focus on your “comparative advantage” of printing paper and your friend on his comparative advantage of making stuff, then in the long run he’ll win because your economy is fake and his is real.
What does he win? More paper? Less glibly - What does a short term tariff on the goods I’m buying from him do that isn’t already baked in to this “long run” scenario you’re envisioning? Say I mark up all the goods I buy from him and the result is that I have to spend more time making goods - why wouldn’t I just do without tariffs, benefit from as many goods as possible, and then start making more goods myself whenever my neighbour stops accepting my paper?
Why would free trade eliminate trade deficits? The United States is incredibly wealthy and its citizens and companies can buy more than poorer countries. Not to mention all the other factors that exist in global trade. The belief that trade deficits are bad baffles me.
With Canada, there's a deficit because they are willing to do things like send oil in exchange for promises, and then they use the promises to do things like buy capital that is located in America.
There's nothing about fairness in trade and trade deficits/surplus. Trade is a competition after all. Free trade was what gave the German States an enormous boost and the Zollverein was a key element towards unification even though that was not the intention[0].
Have I missed the news cycle where Trump complained about the CCP committing genocide on the Tibetans and Uyghurs? How they force them into slave labor. Btw, the reading through the Wikipedia article on Penal labor in the United States make me wonder whether where the USA stands...
These tariffs are a soft blockade carried out as part of a decapitation strike[1] against America.
Imagine you are Russia, and you want to stop American support of Ukraine or that you are China and you want to annex Taiwan. You can't enact a blockade or take military action against America yourself, but you can attempt to destroy us from within by compromising people in positions of power. Oligarchs have more in common with each other than with their countrymen.
This administration lies with the truth. It is true that there are trade deficits harmful to America and that not being able to produce our own masks is a national emergency, but enacting a policy like this is insanity. Those trade deficits are born out of financialization[2] which is a result of the exorbitant privilege[3] of managing the reserve currency.
I can't imagine anyone who writes software intuitively supporting this. Radical changes in policy/code break things. Maybe you do it with something vestigial, but would you do something like this to your databases? The economy, the beating heart of the country, is being put at risk.
It takes a truly wild level of being so mad at Trump that it makes you go full Reagan and extol the virtues of free trade and perpetual war to maintain the reserve currency.
Conversely, it must take a truly wild level of indifference towards American politics to watch globalism go up in flames and cheer. Regardless of where you stand on the aisle or how old you are, surely you can't feel much hope for America's economy watching the Apple supply chain capsize. The economy isn't scripted by Seth McFarlane, America's automotive business and manufacturing bases aren't going to start hiring again overnight.
America has supported perpetual war in Palestine for decades and will continue to do so regardless of how globalism fares. There is not an informed citizen in America that will take this rhetoric seriously, we treat Tel Aviv like they're fighting WWIII but can't spare Maxar access to Ukraine during an active conflict.
You want to associate globalism with conflict so badly, but you just can't deny that America will wage war regardless. It's tragic.
A professional geographer says that Apple is almost unique among major American corporations in how dependent they have chosen to become on Chinese manufacturing. The US economy is in fact much less dependent on international trade than places like China, Germany, the Netherlands and most of the developing nations are. This self-sufficiency of the US economy has been true for at least a century (with a notable exception that the US was dependent on oil imports from about 1960 to 2018, which had the full attention of the US national-security establishment because of how important access to oil is during war).
You don't hear about that much because the small parts of the US economy (mostly in the professional-managerial class) that profits the most from trade with China has been effective at convincing the public that the trade is more vital than it actually is. (Note that most Americans don't even know that the US economy is no longer dependent on oil imports.)
And Apple will survive their mistake.
I'm not a fan of Trump, but I'm even less a fan of the ideology that Mearsheimer calls "liberal hegemony" that is so quick to wage war on any non-democracy anywhere in the world no matter how tangential to American national security interests and no matter how awful and large the number who have died or become refugees in places like Iraq, Libya, Ukraine and Syria because of past applications of this ideological commitment.
FWIW, the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation and human rights abuses. Between the window of Mearsheimer and Chomsky we see a pretty clear-cut obligation to protect our trade partners. We invoked Article 5 of NATO to fight a war on "terror" with the lives of other countries ken, now we're unwilling to even consider their own security?
This isn't a path of conservative rectification, America isn't going to make itself less reliant on partners like Taiwan or more attractive than cheaper alternatives like China. We aren't going to fight less wars as a result, we aren't going to somehow create international demand for our goods while pricing them out of reach for most consumers. I don't know what to tell you here - Trump is far from my worst nightmare but it's plain to see that this will give America's faith-based economy a seizure.
> the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation and human rights abuses.
IMHO, US intervention in Iraq, Libya, Ukraine or Syria increased human rights abuses as long as you include violent death in the definition of "human rights abuse".
The problem with expanding the definition like that is that it also includes the violent death of the aggressing coalition. We could argue that America's relationship with the PKK or Peshmega was "human rights abuse" under that sort of umbrella. Or you could go full stupid-mode and argue that the Vietnam War was an attack on American human rights, foisted onto Northern Korea under the evil auspices of... checks clipboard ...American-provided military regiments.
Again, read what I said and not what you think I meant. The alternative to "liberal hegemony" in the examples you provided are uniquely catastrophic and inherently impact America. You cannot even fathom what 9/11 would have looked like if the US treated Balkan denuclearization as a back-burner issue.
Yes, it sucks the absolute biggest dick that we have to send American troops to defend these interests. No, it is not a good enough reason to forfeit being a world superpower and let ourselves get glassed because AIPAC has American politicians by the balls.
>the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation
The West persuaded Qaddafi to give up his nukes, then a few years went by, then the West helped Libyan rebels overthrow Qaddafi, resulting in his violent death. Since the world was watching, good luck now trying to persuade any other leader to give up his nukes in the future.
I'm not objecting to the West's having persuaded Qaddafi to give up his nukes; I'm objecting to the West's putting him in mortal peril after he cooperated to give up his nukes. (Much of the help given to the rebels consisted of Western bombers attacking Libyan governmental installations. If Libya still had nukes, the West would not have dared to use their bombers in that way.)
So, explain to me again how the agenda and approach I am criticizing (which has been called "liberal hegemony") helps control nuclear proliferation.
Also: I always thought that any attempt to obtain a nuke by the leadership of Iraq ended before the US took over that country.
We voted to watch globalism go up in flames! Many of us thought Obama would do it but he turned out to be the consummate globalist.
Israel/Palestine is a unique situation, I’ll give you that. But I don’t think we must inexorably be “Team America: World Police.” I think our commitment to propping up the so-called “rules based international order” really is in service of free trade.
America's commitment is absolutely arbitrary. There is no reason America has to defend the First Island Chain, the bases in Guam, Pakistan and Poland. We don't have to base troops near Israel or Iran, we don't need to install tripwire brigades near places of international importance. China is happy to take over for America - they've certainly got a fast-growing Navy and the commitment to deploying carrier groups abroad.
Look - I don't really see China or America as the "good guy", you won't scare me (or most liberals) by suggesting a draw-down of American forces abroad. But, any casual wargamer will tell you that this has consequences. If America gives up our hard-power military installations and forfeits our attempts at soft-power economic expansion, absolutely nothing stops China from taking America's seat at the table. If you want that, fine, but I would argue that it is an obvious problem for America's own stability and accountability abroad. We cannot make our money exporting software in a world where we can't import the best hardware.
> Israel/Palestine is a unique situation, I’ll give you that.
No, it is outright proof that your "warmonger" characterization is invariably false. The warmongers aren't the globalists, by some measures the people trying to stop infinite war are the globalists. We've tried ceasefires, treaties, negotiations and more, every time it gets interrupted by Israel. We refuse to punish them, and the motivation for censuring discontent is entirely nationalist.
Accusing someone of Trump Derangement Syndrome (TDS) is a rhetorical technique to pathologize dissent -- to call dissent a sickness, an irrationality. You did all but use the term. You're presupposing my anger at disastrous policy decisions as irrational to ignore addressing the critique directly. You're putting words in my mouth about Reagan, free trade, or perpetual war. I don't support "free" trade or "free" markets. I believe regulation is necessary, regulation, meaning to control the speed or flow of. Trade or Market's can't be free, only people can be free, and I believe in regulating markets and trade to promote freedom for people.
I don't support war, but I also don't support neutrality. Justice requires taking a side in conflicts. Without solidarity, taking a side in disputes and being willing to sacrifice for the benefit of others, justice cannot prevail.
You know you are literally supporting the policy of someone who is threatening Greenland, Canada, and Panama while also arguing against perpetual war right? Smashing trade relations is a prelude to performing actions our trading partners would disapprove of.
China can subsidize 10-20% tariffs for a few months. They CANNOT subsidize a 54% tariffs.
This will have COLOSSAL impacts on China.
They can't fix domestic real estate, subsidize industries, build their military, fund the Belt & Road, etc, etc with this level of tariffs from their largest customer.
I think so too. They have been expanding pretty much everywhere. From Eastern Europe through South America and Africa. In the last COP climate gathering China gave a signal that they would take the leadership and also get on the "green tech" market i.e. export batteries, EVs, solar panels.
This is the most important investment in our economic future in a generation.
I remember discussing with a Juniper guy back in 2008 or so about how Huawei would just rip off their designs. Back then it was conventional wisdom that China could just copy, not build. Now, Huawei can make state of the art routers with home grown chips. Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable. I don’t want my kids having to learn Chinese and become immigrants (as if China would even allow that) because we shipped the last shreds of our economy over there.
Why limit it to national security or anti-dumping? Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
> Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
Define "cheap labor". Is any labor that is cheaper than American labor bad? If not, how are the tariffs differentiating between "bad" cheap labor and "good" cheap labor?
> Tariffs should be expansive enough to take things like cheap labor in foreign countries
But why? Monaco has 39k people and a GDP per capita of $240k. Would they be better off if they instituted auto tariffs so that the cheapest option for selling cars to Monégasques was to build the world's least efficient auto factory? On the world stage, the US is basically a big version of Monaco.
> Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable.
You're looking at this from a pretty jingoist perspective. Take it from another angle - what was Intel doing in the 60s and 70s that China couldn't copy in some guy's garage? What are American businesses exporting today that China has to copy to take for themselves? Why is globalism such a bad idea, why can't other countries copy our cheap cashgrabs?
You can't protect American businesses if they can't compete on their own merits. You can't demand that people respect your judgement if you reject the institutions of international justice. This is the starting gun into the foot of global trade that will leave America limping to the finish line.
Having grown up in the Rust Belt, it's a bit baffling to me that there are intelligent people out there who don't understand why it's a bad idea.
It's a race to the bottom. The jobs all go to countries where people are paid almost nothing to work 90-hour workweeks, safety and environmental concerns are not existent, and they have totalitarian political systems where anybody who complains about any of the above will be shot.
Said other countries have stronger economies which lifts their geopolitical influence and military power. You definitely don't want to give that to governments with those kinds of terrible value systems.
Part of our society's narrative is that anyone can join the middle class: "If you just work hard, you can get a good job, support a family and live a nice lifestyle." The companies formerly supporting that narrative moved their operations out of our country; those opportunities were never replaced. A narrative that binds our society together -- a fundamental part of the American soul -- is getting destroyed. Which is a big factor causing the terrible current political climate.
From the 1990's to today, a lot of Rust Belt places went from union blue to purple and then turned deep red in an instant in 2016 because somebody was finally acknowledging the problem.
It's also the "lawyer/MBA's fantasy" that you can move the physical "making of things" to place B while the "good innovation jobs" stay in place A. It might work for a _short while_ but eventually the real innovation will happen with iteration in the factory floor in Shenzhen. All the Chinese leaders of the last 30 years were engineers and all of ours were lawyers and MBAs. Go figure.
Yes, it's a race to the bottom. But politicians aren't demanding that we should accept slave labor to make our Nike shoes - Nike does that. Tariffs won't change that either, they simply put a price on dealing with "undesirable" labor that Americans wouldn't tolerate anyways. That's how free market economics work on the global stage, I don't think anything has changed in that regard in the past 50 years.
I guess I'm disenfranchised with the entire process, having grown up near Detroit. You won't bring these jobs back from Mexico, you won't onshore EV production from the grasp of China. GM said it, Tesla said it, Apple said it, and now you're listening to me repeat it. Americans can get mad at Europe or Denmark or Canada if it makes them feel better, but it's sure as shit not putting them on any short-lists for importing ASML or ARM IP. And we're fucked either way if we sit around waiting for Intel to "innovate" their way ahead. America can't lead the free world with a bum leg, it doesn't matter how icky China's politics are.
Final assembly != "entirely manufactured". Cymer brings the EUV lightsource, Zeiss the optics, ASML the mechanics and metrology. Commercial EUV Lithography system(s) aren't "a single parent's baby" even if there is now only a single supplier.
ARM IP ? I gather in Cambridge/UK they'd disagree with you. Even if in classical English stiff upper lip style they may say it less brashly (but not less harshly) than a Texan.
This World is rather intertwined. Maybe more than we like or even more than is good for us. But all of us will loose if we strive to kill cooperation or trade "across borders".
The core EUV/DUV IP is co-owned by a mixture of National Labs, and much of the intermediate parts manufacturing has remained in the US as a result. It's not much of a check
> Zeiss the optics
Much of the photonics optics portion is in Dublin CA because of the DoE National Labs commercialization partnership
> ASML the mechanics and metrology
Much of which remains in California as well.
> I gather in Cambridge/UK they'd disagree with you. Even if in classical English stiff upper lip style they may say it less brashly (but not less harshly) than a Texan
Maybe, maybe not.
Hiring data (both open jobs as well as LinkedIn) show otherwise. Their design presence in UK and US is similar in size, and the India one is not far behind.
> This World is rather intertwined
I agree, but the world is not going to end with a goods tariff.
Canada and Mexico have been exempted (thank goodness Congress held the admin accountable), and much of the Americas, Australia, UK, and Philippines have been given a lower tariff slab.
Semiconductors, Pharmaceuticals, Services, Automtive intermediate parts, and a couple other high value goods have been exempted.
The only industries this really hurts is apparel and textiles (never coming back to America anyhow, but now it will return to Latin America) and assembled electronics (consumer electronics will not return to the US either, but Mexico and Brazil are now cost competitive over China and Vietnam).
This kind of a change was inevitable - we faced similar consternation from Europe when we rolled out the IRA under the Biden admin, and we never rolled back the initial tariffs from Trump 1. There is bipartisan appetite for this kind of an action (more planned mind you) but still the principle of supporting American industries either thru subsidies like under Biden or autaurky like under Trump holds.
Now go back to selling off your Satelite players (Eutelsat, OneWeb), Steel manufacturers (Port Talbot), telecom (BT), and battery (Faradion) players to Indian companies like Bharti, Tata, and Reliance.
> > [ on ARM ]
> Hiring data (both open jobs as well as LinkedIn) show otherwise. Their design presence in UK and US is similar in size, and the India one is not far behind.
If you're saying here that ARM is a company with a large and near-even (by headcount) presence in three countries (and much more distributed overall), then I agree with you fully.
Else, what was your point again ? You said in your first post that a majority of ARM (based on what metric?) comes off Austin, and that is not true by your own later words.
Anyway, I also agree we should be proud of the work done by companies such as (for example) ASML or ARM. Irrespective of where that happens, to be honest.
This tariff was a change that was inevitable irrespective of party. I have qualms with it's messaging and rollout, but it's something that both parties were increasingly aligning towards.
Anyhow, what's done is done, and now it's cheaper to purchase intermediate parts like PLCs from Germany (20% overall tariff) or Japan (24% overall tariff) than it is from China (54% overall tariff) or an iPhone assembled in Mexico (NAFTA has been exempted from these tariffs thanks to Congress) or a Nike shoe assembled in Philippines (17% overall tariff) than in Vietnam (49% overall tariff).
Those jobs weren't coming back to the US, and if they were they would be anyhow be automated, but at least we can reduce some dependency on China, and give breathing room to either us or our allies to build some capacity.
> Kleptocracy
Not yet using the formal definition, but absolutely autarkic now like before the 1990s
> You can't protect American businesses if they can't compete on their own merits.
The problem is that “free trade” math defines lowered standards as “comparative advantage.” So any first world country that maintains first world standards is automatically unable to “compete in their own merits.” Globalism creates a race to the bottom.
Exactly, and that is the problem that needs to be fixed. Paying more for the same things doesn't solve a spending problem. It makes it worse. You could completely eliminate international trade and still have a debt problem. You just slowly sell the country and economy to lenders until there is nothing left.
Edit: when you run a deficit, you trade worthless paper for real goods and services. If you don't take on debt, they have nothing to do with it but spend more and buy more goods. If you limit debt, you get negative interest rates in real terms
> Government budget deficits are part of national savings. When Washington runs a larger budget deficit, national savings goes down. In a closed economy, interest rates must go up until households save more (and consume less) and fill that gap. In an open economy, the needed savings can come from abroad instead, and as a result we end up running a larger trade deficit.
This would suggest that if we eliminate free trade, inflation will force us to manage our budget deficits.
The problem is that you're assuming the entire world agrees with your definition of "first world standards". As we have seen, not even American businesses give much of a shit about slave labor if it means we get higher margins on wholesale goods.
If America cut ties entirely with China, then we could take a moral stand. But we haven't done that, because we are utterly dependent on China even when they execute foreign nationals and steal American IP wholecloth.
Maybe I wasn’t clear. My anecdote wasn’t about Chinese IP theft, but rather American arrogance. We thought the Chinese weren’t as smart as us and were just cheap labor, but that was wrong.
I don’t want to take a stand against or cut ties with China. I want America to be more like China, and rebuild our industrial capacity.
In case anyone hasn't seen it yet, the big chart the administration showed with "tariffs charged to the US" was not real.
They used trade deficit numbers in the "tariffs charged to the US column". The numbers in that column are not actually tariffs charged to the US.
The entire "reciprocal tariff" claim was based on a big lie.
Trump also repeated claims that the US trade deficit with Canada was "close to $200 billion" when the official trade deficit is significantly less.
Why is there a trade deficit with a country if there aren’t trade barriers or other unfairness, such as China’s weaker labor laws and environmental laws? Mathematically, “free trade” treats those things as a “comparative advantage” but we don’t have to pretend that reflects reality.
The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero. It also escalates the tariffs as the trade deficit goes up, and reduces them as the other country imports more of our goods. It’s an elegant formula.
Because it's not a barter economy and you would not naturally have equal dollar quantities of goods to buy from and sell to each trading partner individually.
One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage. What goods/services are they going to buy from the US that they cannot get from more local trading partners cheaper? They can import grains more cheaply from nearby neighbors. Southeast Asia is not going to start buying Teslas & Fods, they are driving around in Suzukis and whatever China makes.
You spend $5/week at your baker, does your baker buy $5/week of software from you?
> One country may be on the other side of the world, far poorer and mostly exporting say minerals or basic textile goods where their cheap labor gives them an advantage.
But it’s insane that “cheap labor” is considered a “comparative advantage.” Free trade punishes Americans for their high standards of living, forcing American labor to compete with cheap foreign labor. The whole point of these tariffs is to take that out of the equation.
Do you think the US has an infinite supply of labor?
Do you think that people will choose easier high paying jobs over harder lower paying jobs?
If you give the reasonable answers to those questions, who do you think is replacing the $3/hour production that we import?
Yes this is the inherent tension some miss with "we can just tariff them".
If it's some dirty industry we outsourced 50 years ago, its probably work no one here wants to do, and is being done for $3/hr. What tariff rate will make comparable say.. $15/hr US labor work? None because even if they get rid of EPA and tariff to 1000%, those jobs are only coming back via 1 guy operating 10 robots.. not as 10 jobs.
And then for more advanced industries - look at how much trouble say Intel is having or how long it took TSMC to spin up an AZ fab. You need long lead times with low economic/political volatility in which to plan and implement these 5+ year projects.
Look at how slow moving automaker supply chains are, are they bringing back jobs for 2030 production if they have no idea what the world is going to look like then?
Oh and don't forget the PHD Trump sane washing explainers favorite fallback - hey it's all just a negotiating trick to get leverage. OK so then, again, what business leader is making investment decisions in that context?
Don't worry, tariffs will reduce that comparative advantage by lowering Americans' standard of living.
So you would support criminal proceedings against American farmers/constructions companies/meat packers for using undocumented immigrant labor and punishing Americans for their high standards of living? If we are going to cause all this pain, funny ZERO policy has been about going after these groups of law violators.
Free trade allows Americans to live a higher standard of living. All the goods we buy from foreign countries are cheaper which lets us spend our money on additional things.
Americans even in the middle are so much richer than even our "rich world" peers they don't even realize it.
If the UK was a state, it would be poorer than.. Mississippi on a per-capita income basis.
Note UK itself is incredibly unequal, so if you remove London from the UK the per-capita is far far worse than Mississippi.
Now thats before we even get into our continental friends like France, Spain, Italy, etc.
The issue though it’s very tricky to compare these things. We have very high wealth inequality, and very low house affordability and complicated medical insurance. This all contributes to lower quality of life in the end. And what’s even more important Americans now live worse than Americans in 90s. And this is a problem, and globalism might played some role in it.
How is it insane? Migrant labor has had a centuries-long stranglehold on the American economy. This is neither a new phenomenon nor a moral crisis.
> The formula simply reflects the premise that, in a fair system, trade deficits would average out to zero.
I don't see why you would expect that.
Consider a rich country that mostly exports expensive manufactured technological things. It imports one of the natural resources it needs for this from some poor country that is mostly poor farmers and the poor laborers who extract that natural resource they export.
Its hard to see a way for the rich country to not have a trade deficit with the poor county. Even with what the poor country makes from exporting their natural resources they are unlikely to be able to afford the items the rich country makes.
Or consider two countries that are both rich and have about the same population but have different tastes. Say in country X 90% of the population likes big SUVs and trucks and only 10% like small cars. In country Y it is 90% who like small cars and only 10% like the big ones.
A car maker that has factories in both countries could find it more efficient to have an SUV/truck factory in X that makes the trucks for both countries and a small car factory in Y that makes the small cars for both countries than to have both an SUV/truck and a car factory in each country.
But since the big SUVs and trucks cost more than the small cars Y is going to have a trade deficit in cars with X.
Okay, that's a nice econ textbook hypo that explains the trade deficit with Bangladesh. But why do we have huge structural deficits with the EU, Japan, China, etc? Those are big, diversified economies. You'd think those factors would average out.
Germany is a big, rich economy. How do they manage to run large trade surpluses? They seem to do this quite deliberately. So why is it a bad idea to try and make our economy more like Germany’s? Japan has a large trade surplus. The EU as a whole is basically evenly balanced, tending towards a small surplus. Are our Reaganite overlords smarter than the guys who run those countries?
Cars is a big part of it with Japan. I'd expect that even if all other things were equal Japanese consumers would prefer Japanese cars for the same reason a lot of American consumers prefer Japanese cars: companies like Toyota and Honda are really really good at cars.
I've got way more confidence that I can buy a newly released revision of a Honda and get a car that won't be a lemon and that I can keep running well for 20+ years if I wish with reasonable maintenance than I do for American car companies.
It's not an American worker vs Japanese worker thing. 70% of Hondas and 100% of Acuras sold in the US are built domestically and for the models that are made in both countries there is no significant difference in quality.
The American companies have been improving, to the point that when I decide to replace my nearly 20 year old (and still running great) Honda CR-V the Chevy Equinox EV will be a contender. The new Chevy Bolt will probably be a contender too, especially if they get it out before the federal tax credits go away. 10 years ago this would have not been the case.
Another part of it is the dollar is stronger than the yen. Japan has been accused of trying to keep the yen low but even if they are and they stopped it still will probably be weaker than the dollar.
The strong dollar isn't just a factor in trade with Japan. The dollar being the global reserve currency makes that a factor with nearly everyone else.
For agriculture and food products a lot of countries have stricter health and safety regulations. If an American company needs to put in extra work to make their exported products meet those standards that can make them more expensive and cut demand. The foreign food companies on the other hand are already making their products to meet their stricter domestic standard so it is no extra work to meet US standards.
Is Japan's trade deficit with Australia a good or bad thing? Is Australia ripping off Japan?
The trade deficit is a good thing for Japan because Japan lacks the natural resources it needs as inputs into its industry. It happens to buy those resources from Australia due to comparative advantage.
If Japanese policymakers tried to create a trade surplus with Australia via tariffs, they would make Japan significantly poorer and weaker.
The premise of the formula is flawed. There is nothing inherently unfair about a trade deficit between two countries. There's not necessarily anything nefarious going on if the United States doesn't buy the same amount of goods from Botswana as they might purchase from the United States within any particular year.
But why should there be a structural, long-term deficit between big diversified economies like the U.S. versus EU?
I mean, if me and my neighbour both print currency on our home laser printers and buy goods from each other, am I being taken advantage of when I end up with more goods and he ends up with more paper?
If you focus on your “comparative advantage” of printing paper and your friend on his comparative advantage of making stuff, then in the long run he’ll win because your economy is fake and his is real.
What does he win? More paper? Less glibly - What does a short term tariff on the goods I’m buying from him do that isn’t already baked in to this “long run” scenario you’re envisioning? Say I mark up all the goods I buy from him and the result is that I have to spend more time making goods - why wouldn’t I just do without tariffs, benefit from as many goods as possible, and then start making more goods myself whenever my neighbour stops accepting my paper?
It is simply because the USA consumes more.
Why would free trade eliminate trade deficits? The United States is incredibly wealthy and its citizens and companies can buy more than poorer countries. Not to mention all the other factors that exist in global trade. The belief that trade deficits are bad baffles me.
With Canada, there's a deficit because they are willing to do things like send oil in exchange for promises, and then they use the promises to do things like buy capital that is located in America.
I guess you can decide that's unfair.
Because America has the "exorbitant privilege" of being a global reserve currency:
https://en.wikipedia.org/wiki/Exorbitant_privilege (it's a Wikipedia page about monetary policy).
There's nothing about fairness in trade and trade deficits/surplus. Trade is a competition after all. Free trade was what gave the German States an enormous boost and the Zollverein was a key element towards unification even though that was not the intention[0].
Have I missed the news cycle where Trump complained about the CCP committing genocide on the Tibetans and Uyghurs? How they force them into slave labor. Btw, the reading through the Wikipedia article on Penal labor in the United States make me wonder whether where the USA stands...
[0] https://en.wikipedia.org/wiki/Zollverein [1] https://en.wikipedia.org/wiki/Penal_labor_in_the_United_Stat...
These tariffs are a soft blockade carried out as part of a decapitation strike[1] against America.
Imagine you are Russia, and you want to stop American support of Ukraine or that you are China and you want to annex Taiwan. You can't enact a blockade or take military action against America yourself, but you can attempt to destroy us from within by compromising people in positions of power. Oligarchs have more in common with each other than with their countrymen.
This administration lies with the truth. It is true that there are trade deficits harmful to America and that not being able to produce our own masks is a national emergency, but enacting a policy like this is insanity. Those trade deficits are born out of financialization[2] which is a result of the exorbitant privilege[3] of managing the reserve currency.
I can't imagine anyone who writes software intuitively supporting this. Radical changes in policy/code break things. Maybe you do it with something vestigial, but would you do something like this to your databases? The economy, the beating heart of the country, is being put at risk.
[1]Timothy Snyder -- Decapitation strike: https://archive.is/1xkxK [2] https://en.wikipedia.org/wiki/Financialization [3]https://en.wikipedia.org/wiki/Exorbitant_privilege
It takes a truly wild level of being so mad at Trump that it makes you go full Reagan and extol the virtues of free trade and perpetual war to maintain the reserve currency.
Conversely, it must take a truly wild level of indifference towards American politics to watch globalism go up in flames and cheer. Regardless of where you stand on the aisle or how old you are, surely you can't feel much hope for America's economy watching the Apple supply chain capsize. The economy isn't scripted by Seth McFarlane, America's automotive business and manufacturing bases aren't going to start hiring again overnight.
America has supported perpetual war in Palestine for decades and will continue to do so regardless of how globalism fares. There is not an informed citizen in America that will take this rhetoric seriously, we treat Tel Aviv like they're fighting WWIII but can't spare Maxar access to Ukraine during an active conflict.
You want to associate globalism with conflict so badly, but you just can't deny that America will wage war regardless. It's tragic.
>watching the Apple supply chain capsize.
A professional geographer says that Apple is almost unique among major American corporations in how dependent they have chosen to become on Chinese manufacturing. The US economy is in fact much less dependent on international trade than places like China, Germany, the Netherlands and most of the developing nations are. This self-sufficiency of the US economy has been true for at least a century (with a notable exception that the US was dependent on oil imports from about 1960 to 2018, which had the full attention of the US national-security establishment because of how important access to oil is during war).
You don't hear about that much because the small parts of the US economy (mostly in the professional-managerial class) that profits the most from trade with China has been effective at convincing the public that the trade is more vital than it actually is. (Note that most Americans don't even know that the US economy is no longer dependent on oil imports.)
And Apple will survive their mistake.
I'm not a fan of Trump, but I'm even less a fan of the ideology that Mearsheimer calls "liberal hegemony" that is so quick to wage war on any non-democracy anywhere in the world no matter how tangential to American national security interests and no matter how awful and large the number who have died or become refugees in places like Iraq, Libya, Ukraine and Syria because of past applications of this ideological commitment.
FWIW, the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation and human rights abuses. Between the window of Mearsheimer and Chomsky we see a pretty clear-cut obligation to protect our trade partners. We invoked Article 5 of NATO to fight a war on "terror" with the lives of other countries ken, now we're unwilling to even consider their own security?
This isn't a path of conservative rectification, America isn't going to make itself less reliant on partners like Taiwan or more attractive than cheaper alternatives like China. We aren't going to fight less wars as a result, we aren't going to somehow create international demand for our goods while pricing them out of reach for most consumers. I don't know what to tell you here - Trump is far from my worst nightmare but it's plain to see that this will give America's faith-based economy a seizure.
> the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation and human rights abuses.
IMHO, US intervention in Iraq, Libya, Ukraine or Syria increased human rights abuses as long as you include violent death in the definition of "human rights abuse".
The problem with expanding the definition like that is that it also includes the violent death of the aggressing coalition. We could argue that America's relationship with the PKK or Peshmega was "human rights abuse" under that sort of umbrella. Or you could go full stupid-mode and argue that the Vietnam War was an attack on American human rights, foisted onto Northern Korea under the evil auspices of... checks clipboard ...American-provided military regiments.
Again, read what I said and not what you think I meant. The alternative to "liberal hegemony" in the examples you provided are uniquely catastrophic and inherently impact America. You cannot even fathom what 9/11 would have looked like if the US treated Balkan denuclearization as a back-burner issue.
Yes, it sucks the absolute biggest dick that we have to send American troops to defend these interests. No, it is not a good enough reason to forfeit being a world superpower and let ourselves get glassed because AIPAC has American politicians by the balls.
>the alternative to "liberal hegemony" in places like Iraq, Libya, Ukraine and Syria is nuclear proliferation
The West persuaded Qaddafi to give up his nukes, then a few years went by, then the West helped Libyan rebels overthrow Qaddafi, resulting in his violent death. Since the world was watching, good luck now trying to persuade any other leader to give up his nukes in the future.
I'm not objecting to the West's having persuaded Qaddafi to give up his nukes; I'm objecting to the West's putting him in mortal peril after he cooperated to give up his nukes. (Much of the help given to the rebels consisted of Western bombers attacking Libyan governmental installations. If Libya still had nukes, the West would not have dared to use their bombers in that way.)
So, explain to me again how the agenda and approach I am criticizing (which has been called "liberal hegemony") helps control nuclear proliferation.
Also: I always thought that any attempt to obtain a nuke by the leadership of Iraq ended before the US took over that country.
We voted to watch globalism go up in flames! Many of us thought Obama would do it but he turned out to be the consummate globalist.
Israel/Palestine is a unique situation, I’ll give you that. But I don’t think we must inexorably be “Team America: World Police.” I think our commitment to propping up the so-called “rules based international order” really is in service of free trade.
America's commitment is absolutely arbitrary. There is no reason America has to defend the First Island Chain, the bases in Guam, Pakistan and Poland. We don't have to base troops near Israel or Iran, we don't need to install tripwire brigades near places of international importance. China is happy to take over for America - they've certainly got a fast-growing Navy and the commitment to deploying carrier groups abroad.
Look - I don't really see China or America as the "good guy", you won't scare me (or most liberals) by suggesting a draw-down of American forces abroad. But, any casual wargamer will tell you that this has consequences. If America gives up our hard-power military installations and forfeits our attempts at soft-power economic expansion, absolutely nothing stops China from taking America's seat at the table. If you want that, fine, but I would argue that it is an obvious problem for America's own stability and accountability abroad. We cannot make our money exporting software in a world where we can't import the best hardware.
> Israel/Palestine is a unique situation, I’ll give you that.
No, it is outright proof that your "warmonger" characterization is invariably false. The warmongers aren't the globalists, by some measures the people trying to stop infinite war are the globalists. We've tried ceasefires, treaties, negotiations and more, every time it gets interrupted by Israel. We refuse to punish them, and the motivation for censuring discontent is entirely nationalist.
Accusing someone of Trump Derangement Syndrome (TDS) is a rhetorical technique to pathologize dissent -- to call dissent a sickness, an irrationality. You did all but use the term. You're presupposing my anger at disastrous policy decisions as irrational to ignore addressing the critique directly. You're putting words in my mouth about Reagan, free trade, or perpetual war. I don't support "free" trade or "free" markets. I believe regulation is necessary, regulation, meaning to control the speed or flow of. Trade or Market's can't be free, only people can be free, and I believe in regulating markets and trade to promote freedom for people.
I don't support war, but I also don't support neutrality. Justice requires taking a side in conflicts. Without solidarity, taking a side in disputes and being willing to sacrifice for the benefit of others, justice cannot prevail.
You know you are literally supporting the policy of someone who is threatening Greenland, Canada, and Panama while also arguing against perpetual war right? Smashing trade relations is a prelude to performing actions our trading partners would disapprove of.
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China can subsidize 10-20% tariffs for a few months. They CANNOT subsidize a 54% tariffs.
This will have COLOSSAL impacts on China.
They can't fix domestic real estate, subsidize industries, build their military, fund the Belt & Road, etc, etc with this level of tariffs from their largest customer.
Cool. What about our economy?
Are my eggs getting cheaper yet?
The rest of the world will keep buying cheap stuff from China in increasing quantities.
Meanwhile things just got really expensive for people (and businesses) in the US as so much stuff is made in China.
Yes, it will hurt China. But it will hurt the US much more.
I think so too. They have been expanding pretty much everywhere. From Eastern Europe through South America and Africa. In the last COP climate gathering China gave a signal that they would take the leadership and also get on the "green tech" market i.e. export batteries, EVs, solar panels.
https://www.bbc.com/news/articles/c3rx2drd8x8o
bravo, i like the current admin of the US
some say trump is the cause of the current state of the United States, well, in fact, trump is the result of the current state of the United States
This is the most important investment in our economic future in a generation.
I remember discussing with a Juniper guy back in 2008 or so about how Huawei would just rip off their designs. Back then it was conventional wisdom that China could just copy, not build. Now, Huawei can make state of the art routers with home grown chips. Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable. I don’t want my kids having to learn Chinese and become immigrants (as if China would even allow that) because we shipped the last shreds of our economy over there.
Putting tariffs on rivals that subsidize local industries has both a national security and economic (anti-dumping) justification.
Putting blanket tariffs on close allies has no justification and it harms the US in every respect, economic and security, short and long term.
Why limit it to national security or anti-dumping? Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
> Tariffs should be expansive enough to take things like cheap labor in foreign countries or lax environmental laws out of the equation.
Define "cheap labor". Is any labor that is cheaper than American labor bad? If not, how are the tariffs differentiating between "bad" cheap labor and "good" cheap labor?
> Tariffs should be expansive enough to take things like cheap labor in foreign countries
But why? Monaco has 39k people and a GDP per capita of $240k. Would they be better off if they instituted auto tariffs so that the cheapest option for selling cars to Monégasques was to build the world's least efficient auto factory? On the world stage, the US is basically a big version of Monaco.
Monaco’s economy is fake, so I hope the U.S. isn’t a big version of Monaco.
I don't think you can just hand-wave away high value services that other parties are willing to pay for as being "fake".
> Turns out all the Reaganites got sucked into just handing China our economy. It’s not sustainable.
You're looking at this from a pretty jingoist perspective. Take it from another angle - what was Intel doing in the 60s and 70s that China couldn't copy in some guy's garage? What are American businesses exporting today that China has to copy to take for themselves? Why is globalism such a bad idea, why can't other countries copy our cheap cashgrabs?
You can't protect American businesses if they can't compete on their own merits. You can't demand that people respect your judgement if you reject the institutions of international justice. This is the starting gun into the foot of global trade that will leave America limping to the finish line.
> Why is globalism such a bad idea
Having grown up in the Rust Belt, it's a bit baffling to me that there are intelligent people out there who don't understand why it's a bad idea.
It's a race to the bottom. The jobs all go to countries where people are paid almost nothing to work 90-hour workweeks, safety and environmental concerns are not existent, and they have totalitarian political systems where anybody who complains about any of the above will be shot.
Said other countries have stronger economies which lifts their geopolitical influence and military power. You definitely don't want to give that to governments with those kinds of terrible value systems.
Part of our society's narrative is that anyone can join the middle class: "If you just work hard, you can get a good job, support a family and live a nice lifestyle." The companies formerly supporting that narrative moved their operations out of our country; those opportunities were never replaced. A narrative that binds our society together -- a fundamental part of the American soul -- is getting destroyed. Which is a big factor causing the terrible current political climate.
From the 1990's to today, a lot of Rust Belt places went from union blue to purple and then turned deep red in an instant in 2016 because somebody was finally acknowledging the problem.
It's also the "lawyer/MBA's fantasy" that you can move the physical "making of things" to place B while the "good innovation jobs" stay in place A. It might work for a _short while_ but eventually the real innovation will happen with iteration in the factory floor in Shenzhen. All the Chinese leaders of the last 30 years were engineers and all of ours were lawyers and MBAs. Go figure.
Yes, it's a race to the bottom. But politicians aren't demanding that we should accept slave labor to make our Nike shoes - Nike does that. Tariffs won't change that either, they simply put a price on dealing with "undesirable" labor that Americans wouldn't tolerate anyways. That's how free market economics work on the global stage, I don't think anything has changed in that regard in the past 50 years.
I guess I'm disenfranchised with the entire process, having grown up near Detroit. You won't bring these jobs back from Mexico, you won't onshore EV production from the grasp of China. GM said it, Tesla said it, Apple said it, and now you're listening to me repeat it. Americans can get mad at Europe or Denmark or Canada if it makes them feel better, but it's sure as shit not putting them on any short-lists for importing ASML or ARM IP. And we're fucked either way if we sit around waiting for Intel to "innovate" their way ahead. America can't lead the free world with a bum leg, it doesn't matter how icky China's politics are.
> not putting them on any short-lists for importing ASML machinery
That ASML machinery in EUV and DUV is entirely manufactured in SoCal - ASML was the the commercialization partner in LLNL's Cymer Inc.
> or ARM IP
Designed in Austin Texas - right by Barton Creek - or in Bangalore next door to Samsung and Nvidia, and across the street from Google.
Final assembly != "entirely manufactured". Cymer brings the EUV lightsource, Zeiss the optics, ASML the mechanics and metrology. Commercial EUV Lithography system(s) aren't "a single parent's baby" even if there is now only a single supplier.
ARM IP ? I gather in Cambridge/UK they'd disagree with you. Even if in classical English stiff upper lip style they may say it less brashly (but not less harshly) than a Texan.
This World is rather intertwined. Maybe more than we like or even more than is good for us. But all of us will loose if we strive to kill cooperation or trade "across borders".
The core EUV/DUV IP is co-owned by a mixture of National Labs, and much of the intermediate parts manufacturing has remained in the US as a result. It's not much of a check
> Zeiss the optics
Much of the photonics optics portion is in Dublin CA because of the DoE National Labs commercialization partnership
> ASML the mechanics and metrology
Much of which remains in California as well.
> I gather in Cambridge/UK they'd disagree with you. Even if in classical English stiff upper lip style they may say it less brashly (but not less harshly) than a Texan
Maybe, maybe not.
Hiring data (both open jobs as well as LinkedIn) show otherwise. Their design presence in UK and US is similar in size, and the India one is not far behind.
> This World is rather intertwined
I agree, but the world is not going to end with a goods tariff.
Canada and Mexico have been exempted (thank goodness Congress held the admin accountable), and much of the Americas, Australia, UK, and Philippines have been given a lower tariff slab.
Semiconductors, Pharmaceuticals, Services, Automtive intermediate parts, and a couple other high value goods have been exempted.
The only industries this really hurts is apparel and textiles (never coming back to America anyhow, but now it will return to Latin America) and assembled electronics (consumer electronics will not return to the US either, but Mexico and Brazil are now cost competitive over China and Vietnam).
This kind of a change was inevitable - we faced similar consternation from Europe when we rolled out the IRA under the Biden admin, and we never rolled back the initial tariffs from Trump 1. There is bipartisan appetite for this kind of an action (more planned mind you) but still the principle of supporting American industries either thru subsidies like under Biden or autaurky like under Trump holds.
Now go back to selling off your Satelite players (Eutelsat, OneWeb), Steel manufacturers (Port Talbot), telecom (BT), and battery (Faradion) players to Indian companies like Bharti, Tata, and Reliance.
> > [ on ARM ] > Hiring data (both open jobs as well as LinkedIn) show otherwise. Their design presence in UK and US is similar in size, and the India one is not far behind.
If you're saying here that ARM is a company with a large and near-even (by headcount) presence in three countries (and much more distributed overall), then I agree with you fully.
Else, what was your point again ? You said in your first post that a majority of ARM (based on what metric?) comes off Austin, and that is not true by your own later words.
Anyway, I also agree we should be proud of the work done by companies such as (for example) ASML or ARM. Irrespective of where that happens, to be honest.
I'm assuming that America isn't a kleptocracy, which I will admit is an unfair benefit of the doubt.
This tariff was a change that was inevitable irrespective of party. I have qualms with it's messaging and rollout, but it's something that both parties were increasingly aligning towards.
Anyhow, what's done is done, and now it's cheaper to purchase intermediate parts like PLCs from Germany (20% overall tariff) or Japan (24% overall tariff) than it is from China (54% overall tariff) or an iPhone assembled in Mexico (NAFTA has been exempted from these tariffs thanks to Congress) or a Nike shoe assembled in Philippines (17% overall tariff) than in Vietnam (49% overall tariff).
Those jobs weren't coming back to the US, and if they were they would be anyhow be automated, but at least we can reduce some dependency on China, and give breathing room to either us or our allies to build some capacity.
> Kleptocracy
Not yet using the formal definition, but absolutely autarkic now like before the 1990s
> You can't protect American businesses if they can't compete on their own merits.
The problem is that “free trade” math defines lowered standards as “comparative advantage.” So any first world country that maintains first world standards is automatically unable to “compete in their own merits.” Globalism creates a race to the bottom.
Trade deficits are a huge advantage for the buyer.
Who wants to spend 12 hours a day doing hard labor when you can pay someone peanuts to do it?
Who do you you think benefits: The person spending the peanuts or the person working 12 hours a day?
Trade deficits are not a problem, but a huge advantage. Trade deficits are self correcting if you don't live on borrowed funds.
> Trade deficits are self correcting if you don't live on borrowed funds.
But we do.
Exactly, and that is the problem that needs to be fixed. Paying more for the same things doesn't solve a spending problem. It makes it worse. You could completely eliminate international trade and still have a debt problem. You just slowly sell the country and economy to lenders until there is nothing left.
Edit: when you run a deficit, you trade worthless paper for real goods and services. If you don't take on debt, they have nothing to do with it but spend more and buy more goods. If you limit debt, you get negative interest rates in real terms
https://www.silvercrestgroup.com/do-the-budget-and-trade-def...
> Government budget deficits are part of national savings. When Washington runs a larger budget deficit, national savings goes down. In a closed economy, interest rates must go up until households save more (and consume less) and fill that gap. In an open economy, the needed savings can come from abroad instead, and as a result we end up running a larger trade deficit.
This would suggest that if we eliminate free trade, inflation will force us to manage our budget deficits.
Only if you cancel foreign investment, which absolutely nobody is talking about. That is a closed economy.
Nothing about trade stops you from selling your home and factory and national parks to China so that you can enjoy treats today.
The problem is that you're assuming the entire world agrees with your definition of "first world standards". As we have seen, not even American businesses give much of a shit about slave labor if it means we get higher margins on wholesale goods.
If America cut ties entirely with China, then we could take a moral stand. But we haven't done that, because we are utterly dependent on China even when they execute foreign nationals and steal American IP wholecloth.
Maybe I wasn’t clear. My anecdote wasn’t about Chinese IP theft, but rather American arrogance. We thought the Chinese weren’t as smart as us and were just cheap labor, but that was wrong.
I don’t want to take a stand against or cut ties with China. I want America to be more like China, and rebuild our industrial capacity.
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