No, Trump is NOT winning in trade
Trump supporters claim that Trump is "winning" on trade.
Let's look at the facts.
It's hard to see how a significant worsening in the trade deficit means you are winning.
Record imports drove the U.S. trade deficit up for the third straight month in August. The deficit in the trade of goods with China and Mexico hit records.The Commerce Department said Friday that the trade gap — the difference between what America sells and what it buys abroad — rose to $53.2 billion in August from $50 billion in July. The August reading was the highest since February.
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President Donald Trump campaigned on a pledge to bring down U.S. trade deficits and has slapped taxes on imported steel, aluminum and on many Chinese products, drawing retaliatory tariffs from U.S. trading partners.Trump’s sanctions have yet to have an impact on the deficit, which is up 8.6 percent this year to $391.1 billion. The goods deficit with China rose 4.7 percent in August to a record $38.6 billion; and the gap with Mexico widened 56.9 percent to $8.7 billion, also a record.
If Trump's objective was to reduce America's trade deficit, he's failing.
My attitude on tariffs is roughly similar to this headline:
Tariffs Can Work—but Not Stupid Ones
Trump’s new steel and aluminum tariffs mistake the means for the ends.
I'm not sure what Trump's means and ends are (other than flattery and personal gain), but my objective on trade would be to enhance the wealth of the nation.
In order to accomplish that the working class has to have the leverage to bargain with employers. Otherwise getting a raise is darn near impossible. You can't do that when an employer can offshore the jobs, cost-free.
So what's Trump's record with offshoring?
Despite boasting that he would punish corporate offshorers, a new research report from Good Jobs Nation - Broken Promises #2 - shows that President Trump is actually using the executive power of the presidency to incentivize corporations to ship good jobs overseas in record numbers.Our study reveals that the Trump administration has awarded more than $50 billion in new federal contracts to companies that continue to shutter U.S. factories as they seek cheaper labor abroad.
As a result, top federal contractors - Carrier’s parent company United Technologies, General Motors, Honeywell and Siemens - are now offshoring jobs at the fastest rate since the Great Recession. In fact, annual offshoring by taxpayer-funded corporations under Trump is on track to be three times greater than under the Obama and Bush administrations.
Overall, more than 133,000 Americans have received pink slips since Trump took office.
President Trump has the power to stop giving taxpayer dollars to companies that outsource jobs. However, even though he’s signed more than 100 executive orders and memoranda, he has yet to sign a single one that delivers on his promise to “create more jobs” by stopping offshoring.
Trump's tax cut actually encouraged offshoring jobs.
So now we have some facts to work with.
Comments
THANK YOU, gjohnsit, for OUTSTANDING reporting
Betty Clermont
Also want to let you know that many of your posts
area hit on Facebook too. People are interested in what you write.
"Religion is what keeps the poor from murdering the rich."--Napoleon
I have learned the phrase "supply chain".
It seems that American and American companies have no choice but to buy various Chinese imports as there are no domestically made substitutes. What American companies manufacture any type of major computer/network component in the US? The tariffs in this case just cause higher prices as there are no domestic producers at any point of the "supply chain".
Seems the Russians are a good case study on tariffs. They essentially put on infinite tariffs on EU food items (near complete ban), but funded establishing domestic substitutes. Which by all appearances has worked. In the case of Russia, which may be unique, sanctions at least if you consider them a type of tariff seems to have made the country self-sufficient in terms of feeding itself.
a related unintentional consequence
For some companies, the tariffs create an incentive to offshore manufacture. For example, if a set of components are produced in China and are used as part of an item assembled in the US, the company has to pay tariffs on the components. If they are assembled into a final produce in a country with which we have no tariffs, the tariffs on the components essentially disappear.
In fairness to Trump, however, short term reductions in the balance of trade may not be an anticipated outcome of the tariffs. For some industries, it will take years, perhaps decades (perhaps never), to rebuild the domestic manufacturing destroyed by the policies of Reagan, Clinton, Bush and Obama. The other outcome that the Trump administration really wants is to come to more equitable trade agreements and get rid of the tariffs.
Russia has been under sanctions since 1917
They are not only self-sufficient, they have almost no external debts because they couldn't borrow from overseas.
Voodoo economics
Trump doesn't have a clue as to what he is doing. Almost all of his policies are based on erroneous assumptions. His M.O. is to come up with the wrong problem, a bad solution and then take enormous pride in being the "can do" president. Time will undo him, but meanwhile he will cause unlimited damage.
The US consumer segment is booming because of two things - inexpensive consumer goods from China and unlimited credit. We cannot domestically substitute consumer goods without turning the entire supply chain upside down and developing new automated technology. No one wants to do that, because the system works. Walk into any shopping center and check out the huge inventory of goods at reasonable prices. Why would a US manufacturer want to undo that and attempt manufacturing, with huge overheads and expensive wages. They all moved manufacturing to China over the last two decades. Look at it this way. The Chinese factories work really hard pay very low wages and are in a very efficient manufacturing environment, so that you can enjoy those consumer goods. America's economy sits on top of the sweat of the Chinese worker.
And Trump says we are being ripped off. In reality the Chinese consumer should be enjoying the output of their super efficient manufacturing sector,and we should be doing the R&D to develop efficient automation. But, that doesn't make jobs.
We can't have balanced trade with China because we don't make the products they want at a good price and the US dollar is overvalued, making our imported goods cheap and our exported goods expensive. If the US dollar was not the world reserve currency, the dollar would seriously devalue, as the trade inbalance would force this. At that point imported consumer goods would cost twice a much and our export goods would be twice as desirable at that price point.
So Trump's solution is to slap on tariffs. Again a bad reading of the problem, a bad solution, and a big pat on his own back. The effect of this policy will be to put the brakes on the US consumer segment and cause inflation as the tariffs are passed on to the consumer.
Capitalism has always been the rule of the people by the oligarchs. You only have two choices, eliminate them or restrict their power.
in other words ...
sourcerer witch politicians practice voodoo politics to save the believers in the magicians power from losing their minds.
Reminds me of something. Believers lose mind and money and then their lives.
Ok, just had bad flash backs...
https://www.euronews.com/live
Is that the whole story on trade?
Are the tariffs collected included in the reported trade deficit? If so, that fact explains all of the increase. Also, since tariffs generate revenue for the Federal government, they help reduce the Federal budget deficit from what it would otherwise be.
No, it's not the whole story
but it's the biggest part of the story.
You are more than welcome to add data.
I just wanted to give some actual data to the topic after seeing a comment supportive of Trump's trade policy that lacked any data.
It's too early to draw conclusions.
Most of the tariffs are only starting to kick in. Any increase in imports in the 2nd and 3rd quarter is likely caused by stockpiling of inventory in expectation of price increases due to the tariffs. We'll have more solid data this time next year.
Why do you think the numbers will change?
Why do you think temporary tariffs, and incremental changes in FTAs, will change anything?