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.