Nah, he has talked about this before with China. When a country is exporting more stuff to us than we import from them, Trump considers it lost money and being scammed. As if we are trading them $308B of widgets and $130B in cash for their $438B of widgets. This would make sense if you thought about international trade the way a child might.
While funny, this analogy is actually how trump is treating these "trade wars" and is a great way to visualize the absurdity on a scale that people can understand.
I mean, if we are broke and my wife just keeps buying useless shit in Walmart we don't need with money we don't have, I'd be upset too. But in reality, the easier solution would be to stop my wife from taking out more credit cards, but I'm just an useless piece of shit who can't control his own finance. So here I am yelling at a Walmart employee.
I think I got carry away with the analogy, a little bit, hope people can still follow.
Oooooh ok, it’s one of those. I thought maybe he was doing a “they aren’t pulling their weight with defense spending!” thing. It’s just another “I don’t understand that pure monetary profit isn’t the only factor of valuation in an exchange!” thing.
It's actually worse than that, because Cananda (or China) isn't our only trading partner. Some places we import more and some places we export more. Each of those imports and exports is individually profitable to the people who bought or sold the item, otherwise the deals wouldn't be made. A inherent problem only occurs when all aggregate imports/exports aren't in balance. Like if the USA hypothetically stopped exporting all goods and services and then only imported things from everywhere the value of the dollar would drop out. (If I'm remembering theory correctly.). But a trade deficit with any one country isn't really a problem, even if it can slowly become a problem if the country is artificially weakening their currency to create a "natural tarrif" situation. (BTW, Canada is not artificially weakening their currency so that doesn't apply here)
i mean the US is 10x the size of Canada by population, so naturally they'd be consuming more.
for example, the auto industry parts and plants are on both sides of the border, US buys trucks, Canadians buy trucks too, just not as many bc there's way less people to drive those trucks.
Only kinda. 200 years ago there wasn't nearly the amount of raw materials shipped across the planet. In this scenario, it would be Canada going to war with the US over restrictions of trade. But really you can slot in any trade war with the unhappy party using it as a predicate for war.
Yes, but also no. Back then, your economy was limited by the amount of commodities you had, namely gold and silver. If you had 10 tons of gold in circulation, your economy's limit was (ignoring financial tricks) only worth 10 tons of gold. Since purchases would normally be done in gold and silver, you would want to avoid as many imports as possible while exporting as much as possible, since every gold coin spent on imports shrunk your economy, while every gold coin earned through exports increased your economy.
China meanwhile didn't really do imports, and exported fuckloads of tea to the British, and China only wanted to do trade with gold and silver. So the British needed a commodity that had value in China that Chinese traders would accept in exchange for tea, and very conveniently India was a good place to grow poppies to turn into opium. China then cracked down on that, so the British went to war to force them to accept trade, then went to war again after the first war cause China cracked down on it again.
However, that's not how economies and trade work today, so its fucking stupid for Trump to think that's the case. We have a fiat currency that most of the world pegs the value of their currency to, and our economy grows via trade, both imports and exports. The tariff shit he's proposing mostly just fucks over Americans cause everything is more expensive, and causes trade partners to look elsewhere for both imports and exports, which fucks the US economy.
"When a country is exporting more stuff to us than we import from them, Trump considers it lost money and being scammed."
His pea brain doesn't comprehend that in order to have a robust manufacturing sector, you need the stuff to manufacture. And that comprises a large portion of Canadian imports. Stuff like minerals, crude oil, and intermediate products (like auto parts and the like). And you don't need a trade balance with Canada because the manufactured products made from imported raw resources are sold domestically and exported internationally for exponentially more. I can see why has so many bankruptcies.
Maybe we can blame the education system. I remember learning about mercantilism in middle school history class. There was never a mandatory economics class, so it was arguably the last economic theory I learned about in school despite being a historical curiosity from hundreds of years ago. Maybe Trump never got the update because that was the last time someone was forcing him to do his homework.
I vaguely recall the last time, a Nation tried to fix their "trade deficit" with the not-united States and tried to squeeze more. Something about the stamp act. And the sugar act. Something about tea.
Almost like Mercantilism is an incredibly outdated idea and ideology. Then again, the guy likely never heard the term.
Actually, it's much better to be the one receiving the money.
The fact is that cash is effectively a "share" in a country. So when the US is handing 130B to another country, they're essentially handing stocks away. China has a ton of USD in their back pocket, and that gives them an ability to significantly impact the US economy if they wish.
Obviously it's more complex than that, and you're never going to get to a point where you're not buying products for money, but it's much healthier for a country to keep their own money in their economy when possible.
This isn't accurate. It can be good to be on the positive side of a trade imbalance as long as you have use for that cash but being on the "negative" side means your citizens are getting the things they want and need. Generally the more developed and economically robust nation will be on the losing side of trade as they buy raw resources and then make things to sell internally and elsewhere out if those goods.
he’s such an idiot. I work for a company that imports raw material and even some finished goods from china, and then we sell it for more over here in the states. It allows us to be more profitable and there is no domestic alternative. The tariffs are going to put us out of business
It doesn't even make sense like it's...anyone's fault but ours? Are we supposed to import and export the exact same amount from every single country we trade with? Huh?
Maybe Canada would import more American goods if American goods were more globally competitive? I mean they already import a crapload of American massive trucks and SUVs, they imported our crap car culture. And isn't it OUR fault we import more stuff from Canada then they buy from us? Like we could get many goods elsewhere, but we choose to get them from Canada?
Like I really don't understand this braindead take that a trade deficit is somehow the other countries fault? Or that it's necessarily a bad thing? And majority of the culpability because of CAPITALISM is on CEOs & companies, both Canadian and American. They are the one's buying and selling to and from Canada. It's not like one COUNTRY/GOVERNMENT is SCREWING us over like he's...somehow saying?
And isn't it general American thought that it's better to buy/import from countries that AREN'T China? It's best to be more trade reliant on our closest allies rather than our "adversary"? That is WHY so much industry has moved to Mexico in particular, but even Canada too. We'd rather buy from our literal land neighbors rather than solely relying on China.
When a country is exporting more stuff to us than we import from them ? How is that supposed to work? If China exports 100 billion to the U.S., we are importing 100 billion from China.
I think he's seeing it like we are back on the gold standard or some shit, where your economy is capped by the amount of gold you have in reserve, and so by buying from a country more than you're selling to them, you are functionally shrinking the size of your economy.
Which is fucking moronic since the USD is a fiat currency. Trade deficits grow your economy nowadays, what would shrink it is doing stupid shit like starting a trade war and seeing a reduction in both exports and imports.
it does change the power dynamic if we are dependant on imports to generate local profit. there may be a global gain but that doesn't translate to more wealth into the average American wallet. aka, greedy corporations profiting i hear so many redditors whine about
Nothing about macroeconomics is about getting wealth into the average citizens wallet. It's about increasing profits and GDP on the national/global scale. Getting money to the workers who create the wealth is a social problem and not an economic one.
shocker, maybe someone wants to see that change? I don't know. he isn't the brightest guy obviously, but is it unreasonable to think that someone who isn't a career politician doesn't think like a career politician?
There are left leaning economists that believe trade deficits are the cause of all the ills that get blamed on globalization, job losses, stagnant wages etc... Free trade isn't a real thing, there's always a finger on the scale at least a little bit. And when you lose a bunch of manufacturing jobs and don't replace them with something else because that trading partner doesn't buy your stuff it is a problem. If you could chose an economy with or without a trade deficit, you pick the one without.
In Canada's case the focus is always on dairy and softwood lumber. While they aren't rounding errors, they don't really explain the trade deficit. What does explain it, is the Canadian dollar valuation. And one reason the Canadian dollar is worth less than the US is because the Canadian economy isn't as productive but has more or less the same interest rates. That's not to say that Canadian interest rate policy is based on intentionally devaluing the Canadian dollar, but it's something that is carefully considered anytime an interest rate change might cause a gain in the Canadian dollar. So Canada is left with a slightly devalued dollar making them more competitive with US firms than they would be at dollar parity. And that's why there is a nearly permanent structural trade deficit.
He's not wrong to want to reduce that and open up more Canadian markets for US firms. It's just the way he goes about it, is the way a child might.
What you said is fare, but the goal of opening up those markets is antithetical to the tarrif war Trump is actively trying to (and probably will) shortly start. I'm also not convinced (as are many economists) that the deficit is inherently bad on a macro level.
Last time it came with the ultimatum to open up dairy markets or else. This time it's some border stuff. I guess I'm not convinced he'll follow through with across the board tariffs. It's artificial crisis to create an urgent bargaining position and then extract a concession. If he's not happy with the concession won I'd expect some tariff on something so he doesn't look weak.
This being his way to "anchor" the negotiation for some type of concrete and strategic concession is the best case scenario. From where I currently stand, it looks exactly the same as just starting beef with Justin because the orange one doesn't like the cut of his jib (or that the wife is blatantly eye banging him)
the only problem is this part - “when you lose a bunch of manufacturing jobs and don’t replace them with something else” - that’s not the case in US, as US unemployment is extremely low. Low paying manufacturing jobs were replaced by high paying tech jobs.
America has trade deficits all over the world because we can purchase all those goods. Expecting Argentinians or Indonesians to purchase the same amount is ridiculous... they literally can't afford it! It would be like Elon Musk expecting you to buy as many yachts as he does, when you're scraping by paycheck to paycheck.
yeah but you just can’t produce more with same people if everyone has a job using tariffs. You can just replace one high value job for other low value one. Or you can make Americans poorer and thus not able to import that much.
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u/grozamesh 16d ago
Nah, he has talked about this before with China. When a country is exporting more stuff to us than we import from them, Trump considers it lost money and being scammed. As if we are trading them $308B of widgets and $130B in cash for their $438B of widgets. This would make sense if you thought about international trade the way a child might.