Senate Trade War

Again, existence of a trade deficit is not evidence of "lop-sidedness" in a trade deal. The U.S. could balance U.S.-EU trade tomorrow by increasing its savings rate at the expense of consumption.

 

I don't understand that. Could you explain a bit how saving money lowers a trade deficit?

 

If we save instead of consuming, we will buy fewer foreign goods, bringing exports and imports more into line.

 

And I haven't pinned that on Trump or Clinton. Trump, however, capitalizing on what was made by prior administrations? I'll definitely pin that on him - he's trying to get the USA ahead that way. Let's just do away with any pretence of fairness - it does not exist in global trade.

 

On a larger scale, buying from the world on credit is not sustainable forever. U.S. debt is one of the great systemic risks in the global economy. Trump is playing with matches on a dry forest floor in the middle of a hundred year drought. You might say the conflagration was inevitable, but it has to start somewhere. Someone lit the match.

 

Or if we just decided to buy American when ever and where ever possible.

I think it can absolutely exist.

Why couldn't it?

 

Human nature.

 

None of this answers why we'd voluntarily enter into an agreement that we know isn't good for us?

 

On the contrary, you entered the pre-existing agreements because they were good for you.

 

Competitive advantage. Some places are better at making stuff for less while other are better at making stuff that cost more due to their particular circumstances. It is very difficult to ignore all of those specialties.

edit:
@J-Rod, also @Rylo Ken s point about debt is important. China holds enough of ours to send our economy in a tailspin. The only thing keeping them from calling us on our debt is it would implode their own economy too. But, China has a history of playing the long game. We don't. That's also why his mentioning consumption is important too. We don't have anything to fall back on, i.e savings, to protect us.

 

Trader Joes' cookie butter spread.....

 

I get the part about savings. That's why I'm against stuff like vets get "disability" while working full time making $70,000+ a year. And I'm against people being able to collect Social Security "retirement" while, again, working full time making 70,000+ a year.

Now, I'm not talking about the vet who suffered a debilitating injury and can't do his chosen trade.

And I'm not talking about the retiree that doesn't make enough off of his retirement to pay his bills.

I'm talking about healthy people making close to (and in some cases more than) six figures drawing government money.

But these are two forms of waste I see here where I work. Literally dozens of people collecting from one or, in many cases, both of these programs when there is no need.

@anakinfansince1983 The problem is we aren't allowed to compete. In too many cases our products are priced out of the reach of the demographic because of unjust tariffs.

Except for, they are not. India, for one lone example, has 100% tariff on Harley-Davidsons. How is that in our best interest??

 

Harley's problem is they aren't selling enough bikes HERE. India isn't the problem. The problem is their domestic market is in decline. Their sales are off in the U.S. And Trump just made their ability to sell in Europe harder, not easier. They will now go overseas to avoid those tariffs in an escalating trade dispute.

 

A single specific tariff is entirely anecdotal within the discussion of a multi-decade global trading policy.

 

When Rylo Ken was talking about savings, he meant the behavior of individual households, taken in aggregate. Their would be less imports if people bought less things overall. Of course, at some point, lowering demand will also have a "negative" impact on the economy. Triggering a recession is another way to correct the trade deficit. This is just one reason it's a completely stupid metric for Trump to focus on.

 

No no no. I'm not blaming tariffs for Harley's overall position right now.

I'm just saying that the tariffs are making impossible to compete in foreign markets.

And I'm not even saying that a better position in foreign markets would fix the company as a whole. I'm just making a point that Harley can't compete and it isn't their fault. The playing field isn't level.

It's just an example.

The problem is that there are many other examples as well.

 

Of course there are many other examples. Just as you could raise thousands of examples of tariffs the USA levy. They are all but a part of a much larger picture of the USA's trade policies having been founded on the deliberate acceptance of massive trade deficits because, overall, it worked to the USA's benefit.

 

You could have tariffs set at the same % and it still wouldn't be level because the labor markets are different, cost of materials, etc. There are still innumerable variables to take into account that even the same rate wouldn't accomplish "fairness".

 

I'm not talking about that. I'm talking about using tariffs to price foreign goods out of the reach of the target audience.

Like I said, I understand using them to keep cheaper foreign products from undercutting local industries.

Can you name a foreign produced product sold in America that is priced out of the reach of the target buyer because of tariffs?

I know that many times they are used to keep American businesses from being undercut. But they aren't used to make foreign products more expensive than their American counterparts.

Overseas, that's one of the main aims: to make it more expensive to buy American goods that it is to buy their local goods.

 

Doing that for emergent industries makes sense in order to encourage domestic development. But it doesnt make much sense for maturing ones like motorcycles. Harley has already proven they can't even sell their product to their own country. Let them go.

 

If I recall an economics class correctly, aside from the brainwashing, they also taught that infant industry protection was used for HD successfully when it wasn't an infant, just a huge cluster.

 

A fetus bike?

Seriously, I think what you are referencing was when Reagan imposed a targeted protective tariff to allow HD to rebuild in the early 80s when it was reorganizing and some of the employees bought the company back from an outside firm.

 

Your ideological distinction makes no sense.

A country with 3-5 growing seasons per year produces crops more cheaply than the US. The implied pricing should drive less productive US farms out of business. Except we provide millions in annual subsidies to American farmers to prevent that outcome.

In both instances, you are manipulating the market so that someone you like can stay in business. Why or how is one method inherently better than the other?