Trump on Trade, ugh, just wow


#1

This stuff is so ignorant. This guy actually believes or pretends to believe we are “losing money” on trade with China. I find it hard to believe anyone could say this stuff with a straight face.

“What is the United States trade deficit with Mexico, Japan and China? Let’s start with China. Almost $400 billion per year. If you have a company when you’re losing $400 billion you’ve got to do something very fast. We don’t. We’ve been losing hundreds of billions of dollars per year, frankly for decades. It’s not going to happen any more.” (Trump)

It is unclear whether he really believes that a trade deficit is tantamount to “losing” money or whether he’s just saying it because he thinks that’s the level of comprehension of his audience. Either way, it is hard to pack so much stupidity in so few words.

For starters, a trade deficit only means that America — or rather, American companies and consumers — are buying more from China than selling to them. This means we are getting something from China for the money we give it, namely, goods and services that we presumably value more than pieces of paper. In any non-barter economy everyone has a running “trade” deficit with someone and “surplus” with someone. I routinely buy dresses (way more than should be legal, actually) from my dressmaker and sell her nothing at all, but that does not mean I am “losing” money. I get something in return. Maybe Trump is not worried about a trade deficit but a budget deficit. Maybe he thinks we are buying more goods from China than we can afford. But that’s a wholly different issue. When I buy a dress, I can pay for it by: dipping into my savings; working a few hours extra; or taking a loan — none of which has anything to do with the dressmaker.
Trump also believes that if only China would stop devaluing its currency, America’s trade deficit with it would disappear. As far as he is concerned, a cheaper yuan lowers the price of exports and increases the price of imports, resulting in job losses in America. Exports good, imports bad is an old mercantilist fallacy that Adam Smith debunked 200 years ago.

On Trade, Sanders is More Dangerous and Trump More Illiterate - Hit & Run : Reason.com


#2

It is unclear whether he really believes that a trade deficit is tantamount to “losing” money or whether he’s just saying it because he thinks that’s the level of comprehension of his audience.

Without a doubt it’s the second. The man is a master of manipulation. One of the reasons people cite for liking him is that he is “blunt” and “tells it like it is.” Another way of saying he’s simplistic. He lies and distorts the truth in order to reduce the world to the understanding of a simpleton. The world is not blunt, and can’t be conquered with a blunt tool like Trump.


#3

[quote=“Trekky0623, post:2, topic:48459”]
Without a doubt it’s the second. The man is a master of manipulation. One of the reasons people cite for liking him is that he is “blunt” and “tells it like it is.” Another way of saying he’s simplistic. He lies and distorts the truth in order to reduce the world to the understanding of a simpleton. The world is not blunt, and can’t be conquered with a blunt tool like Trump.
[/quote]Or maybe it can…


#4

The two biggest lies from yesterday:’’

1 - Trump on Fox, “I never said Bush lied about Iraq.”

2 - Hillary at some “rally”, “It was different in Libya. Nobody died.”


#5

Who wants to “conquer” the world? I just want to conquer my heart problems.


#6

That’s money leaving our economy and going into theirs. Who do you think is fueling their %8-10 annual growth rate? Their domestic efforts? :rofl:

Yes, we’re getting stuff in return. But our lack of matching import tariffs(when a country puts them on our exports) put our exporters and domestic industries at a disadvantage. Trump’s preference is to get other countries to drop the tariffs on our goods. Then we don’t need to place import taxes. But if they want to put up tariffs, Trump thinks we should fight back, and not just take it on the chin.


#7

[quote=“CWolf, post:6, topic:48459”]
That’s money leaving our economy and going into theirs. Who do you think is fueling their %8-10 annual growth rate? Their domestic efforts? :rofl:
[/quote]I literally cannot wrap my mind around this, hence the OP. My money is *not *yours. My stuff is notyours. If I give it away to a Chinaman, you and the United States literally lost nothing. I buy Chinese products with cash I earn from my work. Are you making a claim that the cash, derived from my labor, that I spend in China belongs to you or to some other American? Are you (and Trump and JWK) really trying to make the case that you own my labor and my stuff?

Yes, dropping tariffs is best for both parties. Putting more up in response creates more problems.


#8

I cannot fathom how the US loses money from purchasing goods that have worth. Furthermore is the US(the Federal government) actually buying stuff or is this the spending of private citizens and corporations?


#9

[quote=“Seravee, post:8, topic:48459”]
I cannot fathom how the US loses money from purchasing goods that have worth. Furthermore is the US(the Federal government) actually buying stuff or is this the spending of private citizens and corporations?
[/quote]Apparently, there is no “private citizen.” There is only the collective – You and I are only projections of this collective.


#10

Whenever I hear that we are “losing” money, my head wants to explode.


#11

This argument is exactly the one made by people who believe that all taxation is theft. I have absolutely no problem with that argument but don’t pretend that it applies to tariffs only and not income tax, sales tax, death tax or any other tax. At least with a tariff you have a free choice: buy the imported product and pay the tax or buy the domestic product and don’t pay the tax. If your fallback argument is that we don’t need more taxes the politicians will just spend it, please consider that it might be advisable to lower or eliminate some other taxes. The fallback argument does not hold water as a negative argument against tariffs. I am sure that you have other, more substantive, arguments; love to hear them.


#12

[quote=“Rightwing_Nutjob, post:7, topic:48459”]
I literally cannot wrap my mind around this, hence the OP. My money is *not *yours. My stuff is notyours. If I give it away to a Chinaman, you and the United States literally lost nothing. I buy Chinese products with cash I earn from my work. Are you making a claim that the cash, derived from my labor, that I spend in China belongs to you or to some other American? Are you (and Trump and JWK) really trying to make the case that you own my labor and my stuff?

Yes, dropping tariffs is best for both parties. Putting more up in response creates more problems.
[/quote]You seem to be overlooking the concept of nation states. America is a country, China is a country. If they tax our exports, we should tax their exports.


#13

Will the Trump supporters in the room please explain how the US is losing money that private citizens and corporations are spending? Even considering the concept of nation states we may lose actual dollars but the items still retain the value. If I(the US) buy $20(ttl) worth of liberal tears from China that is still $20 worth of liberal tears on my shelf. Just because it is not in the form of a dollar bill does not negate its value. We call that net worth.


#14

[quote=“Seravee, post:13, topic:48459”]
Will the Trump supporters in the room please explain how the US is losing money that private citizens and corporations are spending? Even considering the concept of nation states we may lose actual dollars but the items still retain the value. If I(the US) buy $20(ttl) worth of liberal tears from China that is still $20 worth of liberal tears on my shelf. Just because it is not in the form of a dollar bill does not negate its value. We call that net worth.
[/quote]I’ll break it down.
We’re going to use four businesses. Two in America and two in China.
The corporations are:

  1. Austrian International. An American company that will be exporting into China and facing an import tax.
  2. Eye for an Eye Corp. An American company that will be exporting to China and not facing an import tax.
  3. Amazing Wonder Light Go! A Chinese company that will be facing no taxation when exporting to America
  4. Bored With Snarky Names. A Chinese company that will be facing no taxation when exporting to America. (So they’re both basically identical).

Each company sells exactly one million dollars worth of goods as a matter of inventory cost. They also select the same target price of 2x cost.

Amazing Wonder Light Go! Has sales of 2M, minus their 1M in Inventory cost, for a profit of 1M.
Bored With Snarky Names Has sales of 2M, minus their 1M in Inventory cost, for a** profit of 1M**.
Eye for an Eye Corp Has sales of 2M, minus their 1M in Inventory cost, for a profit of 1M.
Austrian International Faces an import** tax of %30** on their product costing them 600,000. They have 1.4M in revenue, minus 1m for inventory, for a profit of 400,000.

Now as a matter of national GDP, let’s look at the effects. Each country sold 4 million worth of goods, that cost 2 million. But what does the final balance look like?
China 2,600,000
America 1,400,000

What I’m suggesting, is either force China to let Austrian International export without taxation, or else impose an equal tax on their industries. This way the balance would be
China 2,000,000
America 2,000,000

That’s balanced trade. We’re not suggesting that new taxes be added into a free trade system. We are suggesting that the free market system is not in operation, and asking our companies to fight with one arm tied behind their back is a disservice to our businesses, workers, and consumers.


#15

That trade may or may not happen CW. Why? Because it sounds like a bad deal for American consumers. But we actually can’t know because we don’t know what these products or how many of them equal your revenue targets, the cost per unit, the benefit per unit. All of this and more goes into the price tag. It could be a smoking deal, and we have lost nothing making it. The guys in the best position to know is the consumer and the seller – not you or Donald Trump.

I’m just passing through but will probably respond more later, OD and CW.

OD, the argument is not the same as “all taxation is theft.” At no level in this particular discussion am I talking about a legitimate level of taxation to pay for actual government services and spending that we must have, necessary government. I am talking an import-export trade imbalance that Trump and others seem to go on about as well, ya know “exports good, imports bad.” And “we’re losing money” when there is a trade imbalance, more imports than exports. That has nothing to do with funding necessary government or with retaliatory tariffs.

CW, you’re the only person I’m hearing talk about retaliatory tariffs (something I disagree with but “understand why” slightly more than basic protectionism).
OD, you’re the only one I hear talking about basic taxation to fund necessary government – well JWK too, but he’s also very much on about trade imbalances. I think you and CW also have been.


#16

No, not at all:

XYZ (made in China) is sold at Wall Mart for $20 buks, WM pays $10 and makes $10 which goes to their cost of doing business. The $10 they pay to China goes to China INC and gets distributed there.

ABC is also sold in China, China INC buys it for $10 and sells it for $20.

There is no trade imbalance, we sent $10 and got back $10 so we are even.

Now lets shuffle the deck:

XYZ ships 1000 to the US, but ABC only ships 500 to China (this can be due to tariffs, or China just will not allow anymore to be sold there). 1000 bought here and half the money we spend goes to China, but only 500 of ours go to China, this is the imbalance.

This is where Trump is gonna deal the cards: Trump calls up Prez of Mexico Manual Labor and says: Manual, we have a $58 Billion trade imbalance (deficit ) with your country and I promised I would build a fence, fence is gonna coast $10 Billion buks and you have 2 choices: 1) stroke a check for $10B LARGE or 2) I am going to (tariff) your products coming into the US to get my $10B fence paid for!

We don’t need a fence for China, so my bet is Trump gonna call up the Prez of China Won Hung Low and tell him: Hung Low, we need to import MORE US made products into China or I am gonna tariff your products to reduce the imbalance with have to a manageable amount.

Then of course we have Apple: Tim, this is the Donald over her in the White House. Wanting you guys to bring production home from around the world, can you do that? NO, Donald we can’t, we are in business to make money and the taxes and regs in the US are a killer. Tim, good to hear that, I am going to Congress with it. Here is my plan, make taxes and regulations the lowest in the free world, will that work? Donald, YOU BET and I am going to send a letter to China and Ireland and Vietnam and tell them they can go to hell Apple is going to Texas!

So yea FREE trade is both a good and bad thing. It cannot be a one way street!


#17

But like Rightwing is saying, we got 1000 Chinese products that are worth the money we gave them, and China gets 500 American products for the money they give us. There isn’t an imbalance because the products themselves have value.

We send more money to China than they send us, but in return China sends us more products than we send China.


#18

Seriously?

My money is not yours. My stuff is not yours… I buy products with cash I earn from my work. Are you making a claim that the cash, derived from my labor… belongs to you or to some other American? Are you (and Trump and JWK) really trying to make the case that you own my labor and my stuff?

I am not disputing your arguments BUT, how does this apply only to tariffs and not to other current taxes, penalties, license fees, permits, currency controls etc?


#19

As opposed to the exported American jobs which have no value. I get it.

The money, whether US$ or Chinese Yuan are mediums of exchange with no intrinsic value. Excesses will, in the course of time, be exchanged for ??? Obviously not American exports. Maybe our empty factories or our land? What a concept! Let’s slowly sell the country for shoddy goods which are designed to last their 30 or 90 day warranties.


#20

No, it is not! Study the balance of payments. US dollars remain US dollars and Chinese yuan remain Chinese yuan.

A quote from Adam Smith is in order.

IV.2.11

To give the monopoly of the home-market to the produce of domestic industry, in any particular art or manufacture, is in some measure to direct private people in what manner they ought to employ their capitals, and must, in almost all cases, be either a useless or a hurtful regulation. If the produce of domestic can be brought there as cheap as that of foreign industry, the regulation is evidently useless. If it cannot, it must generally be hurtful. It is the maxim of every prudent master of a family never to attempt to make at home what it will cost him more to make than to buy. The taylor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes, but employs a taylor. The farmer attempts to make neither the one nor the other, but employs those different artificers. All of them find it for their interest to employ their whole industry in a way in which they have some advantage over their neighbours, and to purchase with a part of its produce, or what is the same thing, with the price of a part of it, whatever else they have occasion for.

Smith: Wealth of Nations, Book IV, Chapter 2 | Library of Economics and Liberty