For decades, Leftists politicians on both sides of the aisle ignored the obvious. We’ve been losing a war on trade.
The salient question might be, “Did they ever want to win on trade?”
It certainly doesn’t appear so. Because the trade deficit increased year after year, with no alarm bells sounding in Congress. By the time we got America’s worst president in history, the economic horror Barack Obama, losing at trade represented “the new norm”.
Obama’s moronic presidency brought America Donald Trump. For that, America can sincerely thank Obama.
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Trump understood the war on trade, and easily turned America’s fortune, or lack thereof, in trade. America now wins on trade.
According to Bloomberg:
President Donald Trump is succeeding in making China pay most of the cost of his trade war.
That’s the conclusion of a new paper from EconPol Europe, a network of researchers in the European Union. U.S. companies and consumers will only pay 4.5 percent more after the nation imposed 25 percent tariffs on $250 billion of Chinese goods, and the other 20.5 percent toll will fall on Chinese producers, according to authors Benedikt Zoller-Rydzek and Gabriel Felbermayr.
And this new paper would be correct. Because China has NO way of winning against the United States in trade, when they have a $375 billion surplus.
As I’ve stated many time, only bonehead, morons would dare call what Trump did a “trade war”.
America has sacrificed over $17 trillion over the last two decades in the so-called “war”. So the better term for what’s been happening is, “America’s Self-Imposed Trade Ass-Kicking”.
The article continues to prove what President Trump knew would happen:
The trade dispute between the U.S. and China is showing slim hope of abating as the leaders of the two nations prepare to meet in Argentina this month. According to Zoller-Rydzek and Felbermayr, the tariffs will do what Trump has longed for: They will cut American imports of affected Chinese goods by more than a third, and lower the bilateral trade deficit by 17 percent.
The Trump administration selected products with the highest “price elasticity,” or high availability of substitutes, according to Zoller-Rydzek and Felbermayr. The Chinese products hit by Trump’s tariffs can mostly be replaced by other goods, forcing exporters to cut selling prices to keep buyers.
“Through its strategic choice of Chinese products, the U.S. government was not only able to minimize the negative effects on U.S. consumers and firms, but also to create substantial net welfare gains in the U.S.,” the researchers wrote.
Recall when Trump announced that his trade balance intentions? The Chinese reacted, and threatened certain American-made inputs.
Evidently, the Chicoms were used to dealing with the inept Affirmative Action president, and not a president with savvy.
Trump laughed in their faces. Because with $375 billion annually to play with, Trump recognized his wiggle room.
The clock ticks on the Chinese, as the U.S. plans to raise duties on the largest $200 billion tranche of goods to 25 percent from 10 percent on Jan. 1. In retaliation, China has slapped tariffs on $110 billion in imports from the U.S. and effectively shut off its purchase of key American agricultural exports including soybeans.
For those doing the math, America still has a few hundred billion to go. China has no more trade room.
Spoiler alert: Trump wins in the end.
Sure, trade is a complicated issue. Thankfully America has a man who understands the complications of trade. And this time, the balance will shift in favor of America. Don’t expect President Trump rid America of trade deficits. China and other countries can make our incidental products. But we will put a serious dent in trade where it matters.
Bloomberg gives America $18 billion so far, and issue a warning:
With the economic costs shifted to China, the U.S. levies will lead to a $18.4 billion net gain for the American government, the researchers wrote.
“As the trade conflict escalates, however, the U.S. administration may not be able to restrict its selection to products with high import elasticities,” they wrote. “And U.S. welfare might decrease as more of the tariff incidence falls on U.S. consumers.”
Don’t worry about that last part. U.S. manufacturers are currently gearing up for production. And they realize that they must operate on thinner margins to compete.
As for the $18 billion swinging our way, that’s just for starters. Expect at least $200 billion dent in our trade deficits within the next two years. And the Chinese will make up most of it.
And it’s already beginning.
As CNBC reports,
Chinese President Xi Jinping and U.S. President Donald Trump put their bilateral trade war on pause momentarily, striking an agreement to hold off on slapping additional tariffs on each other’s goods after January 1, as talks continue between both countries.
In a White House readout of a dinner at the G-20 summit in Argentina, Xi and Trump discussed a range of nettlesome issues — among them the trade dispute that has left over $200 billion worth of goods hanging in the balance.
Meanwhile, “China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately,” the White House said.
Xi also plans to designate Fentanyl as a controlled substance, according to the statement. As the U.S. opioid crisis continues to rage, it would suggest that people selling the drug to parties in the U.S. would be subject to stiff penalties in China.
So a 90-day armistice gets President Trump sales of “undisclosed amounts” of American products. And perhaps the bigger deal is the dent Trump put in the opioid crisis.
One thing not mentioned in that section of the article is the Chinese agreed to lower tariffs on America cars. If things go as expected, the U.S. automakers will have a huge potential market, that no other president opened for autos.
After 90 days, America will be much farther ahead in what was previously a trade disaster. So Bloomberg’s $18 billion will be revised up soon.