What Trade War: $800 Billion Buys a Lot of Made in America
How do you a lose a war that you’ve been losing for decades?
In the area of a trade war, the United States has but one thing to do: stop losing.
Ok, in Trump terms to “stop losing” means WINNING! And that’s exactly what the president plans to do.
As I’ve discussed, the U.S. trade deficit would make us the 19th largest country in the world. Our trade deficit is larger than the GDP of Saudi Arabia.
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Our trade deficit with China alone would be the 71st largest country in the world, if it stood on its own as a GDP. $375 billion are the estimates.
So when China threatened us, I chuckled. I then anticipated what Trump might do, as China targeted areas that would hurt the most, for example soybeans. When you have $800 billion to spend, you can do a lot to alleviate the pain. Take it down from a 9 to a 2, ergo pain-free.
And that’s just what President Trump proposed.
As Politico reports,
Agriculture Secretary Sonny Perdue on Tuesday unveiled a three-part, $12 billion plan to ease the sting of retaliatory tariffs on U.S. farmers through a mix of payments, purchases and trade promotion efforts.
The plan seeks to ensure that U.S. farmers and ranchers — a key constituency for President Donald Trump and Republicans — don’t bear the brunt of an escalating trade fight as the administration pursues an aggressive course to rebalance America’s trade relationships.
Trump’s moves to slap tariffs on imports from some of America‘s largest foreign buyers have prompted retaliation against U.S. farm goods like pork, beef, soybeans, sorghum and a range of fruits.
For those doing the math, $800 billion minus $12 billion leaves $788 billion more wiggle room for the president.
I can hear Trump in the Oval Office yelling to the Ag Secretary Perdue, “Next!”
Because when you remove shipping and other distribution costs, the amount of money the president can use to augment the most aggrieved companies will be a fraction of the pain experienced in other countries. Exactly how much do they have to offset their loss of the largest market in the world?
My bet is if President Trump subsidized every industry hurt in his trade negotiations, it would cost America less than $450 billion, leaving $350 billion surplus. Now, imagine what $450 billion invested in American industries would do to the economy.
$50 billion supposedly saved the auto industry and that was with a moron playing president. Imagine what a billionaire businessman with a proven track record of “presidenting” can do with $450 billion for example.
Any industry we want to prop up would feast, as countries begged to get back in our good graces. That said, I’m no proponent of subsidies across the board. But to create more fair trade, I would do exactly what President Trump proposed. And that’s why America remains in the driver’s seat.
The simple fact is America is the best trading partner in the world.
We want and need a lot of products. And we aren’t exactly penny-pinchers when it comes to negotiating. But most products we buy can be and have at one time been made in America. That can happen again, particularly when you have an $800 billion checkbook.
For those who think the president put on the Made in America Summit for show, you would be mistaken. Sure, Trump made sure the world watched that summit. However, you can bet he and his team are looking at ways to make America more self-sufficient….again.
That’s what happens when you bring manufacturing back. Remember manufacturing? The segment of business Obama said America would not get back. Obama lost 17,000 his last year in office, and President Trump gained over 200,000 his first year in office. That type of contrast isn’t by accident.
The global market is the best market. Let’s face it, until Detroit got competition, the auto industry was stagnant. I remember seeing my first BMW, then riding in it. That car made my grandparents’ Impala look and feel like a bucket of bolts. Now the America auto industry is catching up.
We may have lost cars, but we didn’t lose in other areas. American innovation is clear all over the world, no matter whom we hire to manufacture. But why not make products here again? I think we learned our lesson.
Regardless, the most coveted dollar is the dollar of the American consumer. The countries that respect that notion will find themselves doing well in America. Those who disrespect our dollar will find their economies suffering. The EU recognized that, thus their capitulation. Naysayers argue that the press conference means nothing, blah blah blah.
They waged the same arguments about Trump’s meeting with Kim Jong Un, then his meeting with Russia. Oh and his rolling back regulations on business and his tax cuts. I think you see where I’m going.
Trump promised to stop America from losing in the trade war, and he just made one big step in that direction. Expect more soon, as the warning bell has been sounded to the rest of the world.