Added a link to the original post for the Q4 GDP forecast quickly.
> Why is this positive? And I’m not implying it’s negative either. It’s just a fact sans context on the effect of the market unless you’ve bought the current admins argument that a trade deficit means you’re getting ripped off.
When would increased exports not be a good thing for any country? The tariff conversation was interesting for me in particular as more of an ideological free trade advocate because I didn't realize just how heavily other countries were applying tariffs goods from the US in some cases. The admin initially stated they were going to apply reciprocal tariff's but those numbers never fully lined up.
Anytime you can create an incentive to on-shore production, it's typically good for the country based on jobs, domestic production, supply chains following production, domestic industrial education and training, etc.
I never spent too much time thinking about it, but as a negotiation point the US is the worlds biggest importer. That does mean that cheap access to the US market is a valuable tool in those conversations.
"Trade deficit" is another word for "free stuff" and also another word for "being the world's reserve currency". America receives massive quantities of free stuff from other countries and gets to control the banking system of the entire world as a side effect (this is how it manages to collect taxes from non-resident citizens and how it makes sanctions meaningful). Why doesn't America want that to continue?
No there isn’t a reason to do that, but I want to call out that you asked about “critical” industries and this is a thread about tariffs which the admin put on all products, including inputs to industries.
Don’t compare apples to tennis balls.
And in regards to the trade deficit, everytime I look at it the numbers it only includes physical products and not services. We’re a heavily service based economy since producing a Facebook is several steps down the tech tree from producing screws.
So again I will ask why a trade deficit on products is bad. We’re just buying shit from less complex economies or ones where the comparative advantage of trade works out. We’re not getting ripped off.
> Is there any reason America can’t continue that without giving every critical manufacturing industry to China?
Totally. The two things are actually quite different. You (US & industrialised countries) removed capital controls and the cost of transport dropped by a lot (shipping containers etc) which meant that it became more profitable to make things in much cheaper countries and so the businesses did that, and now you're/we're screwed.
Reintroduce capital controls and only trade with people with comparable labour rights and wage levels, and this problem goes away. But ultimately, this change was driven by western economic interests, not China/other countries.
That being said, China played this hand very well (from a manufacturing/export perspective) but they didn't cause this. The US & European businesses did, because they could make more money/pollute with less issues this way.
To get free stuff you have to get free stuff. Why would you manufacture stuff, at great expense, when you're getting it for free? That makes no capitalistic sense.
Because ultimately humans are not homo econonimus, and many citizens of the west won't be able to get jobs in tech/finance/services. It's a societal issue rather than a capitalist issue.
We live in a capitalism. If something makes capitalistic sense it happens, otherwise it doesn't. Stuff will not be manufactured locally at great expense when it can instead be imported for free.
The absence of capital controls is a political choice that people appear to believe is just a law of the world.
If there were capital controls then local manufacturing makes more sense.
It would kill the US stock market so it's unlikely to happen, but personally I don't see how unrestricted capital and restricted labour is anything but a recipe for disaster (the consequences of which we've seen in the US and Europe since the financial crisis).
> Why is this positive? And I’m not implying it’s negative either. It’s just a fact sans context on the effect of the market unless you’ve bought the current admins argument that a trade deficit means you’re getting ripped off.
When would increased exports not be a good thing for any country? The tariff conversation was interesting for me in particular as more of an ideological free trade advocate because I didn't realize just how heavily other countries were applying tariffs goods from the US in some cases. The admin initially stated they were going to apply reciprocal tariff's but those numbers never fully lined up.
Anytime you can create an incentive to on-shore production, it's typically good for the country based on jobs, domestic production, supply chains following production, domestic industrial education and training, etc.
I never spent too much time thinking about it, but as a negotiation point the US is the worlds biggest importer. That does mean that cheap access to the US market is a valuable tool in those conversations.