The free market and tariffs.
Trump talks about offending countries i.e. those who have trade surpluses with USA. To call them offenders who have been ‘taking advantage of the US’ is just nonsense.
In a free market, sellers may promote and distribute their goods but they cannot force the buyer to purchase. The trade deficit that the U.S. has is merely the result of the decisions by the buyers. So, if there is an offender, that is the American consumer or company.
USA is about 5% of the worlds population but, depending on what and how you are measuring the USA consumes 3 to 5 times that figure. (Side note: USA produces 30% of the world’s trash.)
The correct course of action for the US if it wishes to eliminate trade deficits is to target the foreign goods and services which the US consumes ‘too much’ of, but to do it on a macro basis. So, if the US consumes too much foreign oil, target ALL oil. Thus a US sales tax would meet this need without all the rigmarole and bad feeling that tariffs engender. On the other hand, it makes more sense just to take the deficit on the chin, using the huge wealth the US has.
Meanwhile, the US makes a huge profit from the dollar’s role as a reserve currency in which many trades are conducted. I don’t suppose Trump includes this in his calculations. This points to an unconsidered effect of tariffs: the rise of rival reserve currencies. In the future, oil sales may not be in petrodollars but in petroeuros, or ‘petro brics francs’ for example. That would cost the US big time.
Trump talks about offending countries i.e. those who have trade surpluses with USA. To call them offenders who have been ‘taking advantage of the US’ is just nonsense.
In a free market, sellers may promote and distribute their goods but they cannot force the buyer to purchase. The trade deficit that the U.S. has is merely the result of the decisions by the buyers. So, if there is an offender, that is the American consumer or company.
USA is about 5% of the worlds population but, depending on what and how you are measuring the USA consumes 3 to 5 times that figure. (Side note: USA produces 30% of the world’s trash.)
The correct course of action for the US if it wishes to eliminate trade deficits is to target the foreign goods and services which the US consumes ‘too much’ of, but to do it on a macro basis. So, if the US consumes too much foreign oil, target ALL oil. Thus a US sales tax would meet this need without all the rigmarole and bad feeling that tariffs engender. On the other hand, it makes more sense just to take the deficit on the chin, using the huge wealth the US has.
Meanwhile, the US makes a huge profit from the dollar’s role as a reserve currency in which many trades are conducted. I don’t suppose Trump includes this in his calculations. This points to an unconsidered effect of tariffs: the rise of rival reserve currencies. In the future, oil sales may not be in petrodollars but in petroeuros, or ‘petro brics francs’ for example. That would cost the US big time.