Behind President Trump’s decision to beat some of the largest trading partners in America with great definitions, its installation of the US -run -the trade deficit with other countries. But many economists say this is a bad measure to judge the quality of the commercial relationship.
The sharp definitions, which came into effect on nearly 60 commercial partners on Wednesday, It has been calculated Based on the bilateral trade deficit, or the gap between what the United States sells to every country and what it buys.
Mr. Trump has long considered that GAP as evidence that America was “torn” by other countries. He argues that the behavior of other unfair countries makes trade very deviations and that the United States needs to be able to manufacture more of what it consumes. But economists argue that this is a flawed way to deal with this issue, given that the bilateral trade deficit appears for many reasons that go beyond unfair practices.
“It is completely ridiculous,” said Danny Roderick, an economist who studies globalization at Harvard University. “There is no other way to say that, there is no meaning.”
Some economists agree with the Trump administration that America’s general trade deficit with the rest of the world reflects a problem for the American economy, because the United States relies on manufacturing elsewhere, including China. But others do not see it as a cause. Almost all economists say that focus on imbalances from one country to another can be very misleading.
Last year, for example, the United States turned bilateral surpluses with 116 countries worldwide. It was running a bilateral trade deficit with 114 countries, according to World Bank data.
These relationships often follow the flow of trade, without much suggesting the country’s commercial practices in general. Matthew Klein, who writes about the economy for Overshoot, notes that the United States runs a trade surplus with Australia because it sends many machines, transportation equipment and chemicals. Australia runs a trade surplus with China, which is sent by iron ore, natural gas and gold. China runs a trade surplus with the United States by sending auto parts, electronics and batteries.
Mr. Klein indicated that the United States also has significant trade surpluses with the Netherlands and Singapore. But this is not because the Dutch people and Singapore are more American products than other countries.
This is because these countries are home to the main ports that import American goods. The Netherlands empty the goods in its ports and send them all over Europe to other consumers, while Singapore does something similar to Asia. But the commercial deficit is calculated based on the country that arrives first, not its final destination.
Economists also criticized Mr. Trump’s tariff to target all foreign trade flows randomly, without looking at the good strategy of the United States or even whether the country can actually make it.
Mr. Trump’s focus on the bilateral trade deficit means even US allies such as Canada, Mexico and Europe are considered enemies when it comes to trade, because they sell the United States more than they buy.
It also ended with high definitions, partly because the country exports a lot of gold to the United States, as did Tiny lesotho, with an average annual income of $ 3500. Lesuto received a preferential commercial transaction under the legislation approved in 2000, and it now makes Bluejeans to the Americans.
Mr. Trump’s tariff is Calculated A simple formula, which is to divide the US -run trade deficit with each country through the value of the goods imported by the United States. This formula means that even the balance and export of the United States to every country, other countries will face an additional tariff, whether the nation provides the United States with advanced technology, games, cocoa pills, or corn.
“The formula” gives a shine of science what is a makeup approach in the first place. ” She says the formula makes many unrealistic assumptions largely, including that American consumers’ request responds similar to all imports.
She said this response “cannot be the same for all goods from all countries.” “How will the United States respond to high definitions on cocoa and natural rubber from Cote d’Ivoire? In the same way that it responds to the higher definitions of machines from Europe?”
Mr. Trump’s advisers defended his method. Stephen Miran, head of the Economic House of Economists at the White House, said in an interview that the president was “clear for decades he believed that the bilateral trade deficit is a major problem for Americans.”
Mr. Miran argued that the trade deficit could be “an agent of the total economic policies that cause a continuous trade deficit.” He said that the Trump administration had conducted many analyzes of the situation, and the president decided that the approach was “the fair path for American workers.”
The administration also seems to look at a focus on the bilateral trade deficit as a way to reach the fact that goods from China have been directed across other countries and to the United States. After Mr. Trump imposed a tariff on China in his first term, many factories moved outside China to avoid tariffs, but they continued to rely on Chinese parts, raw materials and technology.
With the new tariff formula for Mr. Trump, countries that have been a destination for these factories and have trade surpluses with the US balloon in recent years will be severely hit.
“Given that the global economy is now integrated, the two countries have been able to transport goods through the third provinces to enter our market,” said Mark Debllasido, American Kompas policy consultant, a conservative economic research reservoir. He said that with the decrease in the American bilateral trade deficit with China, the deficit with other East Asian countries increased.
“Therefore, it is not enough to target China anymore,” he said. “This global basis should only be if we will see a decrease in the general trade deficit.”
In some cases, the Trump administration is likely to be right, in some cases, the barriers that have turned into the trade created by foreign countries have reduced the amount of the United States exporting to those places and the exacerbation of the trade deficit.
Many countries, especially in Asia, have supported their industrial industries in ways that allow them to sell goods at much lower prices, which makes us produce from the same non -economic goods and cause a trade deficit in the United States with those countries balloon.
Michael Betis, a professor of finance at Beijing University in Beijing, who study the subject, said the new definitions may wander in the way trade moves across certain countries, but it does not do much to change the size of the general trade deficit managed by the United States with the world.
“They focus on the wrong problem and bilateral deficit,” said Mr. Betis.
Mr. Betis sees the general trade deficit that the United States has with the world as a problem with the American economy because it means that the request of consumers in the United States for goods supports manufacturing activity elsewhere, as is the case in China, not in the United States.
But he insists that the commercial imbalances that the United States face individually with other countries does not always reflect this problem, and that the customs tariff will not do much to fix it.
In his opinion, government policies in places such as China, Germany, South Korea and Taiwan lead great trade surpluses. Because every trade surplus needs a deficit to balance this, this ends with the amplification of the American trade deficit. It argues that without more economic changes in China and other countries, these problems will remain.
“There is a serious problem,” he said. “We don’t see the best solution to this problem.”
Other economists are still opposing the idea that managing a comprehensive trade deficit with the rest of the world represents a issue for the United States. Other factors, such as US government spending and investment flows, are The final driver of the American trade deficitSome economists do not ask. They say that if Mr. Trump’s tariff reduces the total trade deficit, then it will be that they have made the American economy or brought out investors away from the United States by getting rid of the world’s confidence in the US dollar and its markets.
“There is absolutely no relationship between the country’s trade deficit and its performance,” said Mr. Rodrik, an economist at Harvard University. He pointed out that both Venezuela and Russia are delighted to trade surpluses. “Do the United States really want to be Venezuela or Russia?”
