The Eureka Springs Farmers’ market is a great place to learn about trade. Farmers and artisans bring products they want to sell, and people of all ages show up to visit and buy fresh produce and other goodies. It is a friendly place, always clean, great products and prices where customers are treated with respect. The farmers’ market is a dog-friendly community center.
Trade between countries works the same way. Bananas, for example, are available all the time, at great quality and low cost. No need to grow bananas in Arkansas; they come from Honduras, Guatemala, Costa Rica, and other places.
Do you have an extra $1,000 per year?
Trump has insisted China is paying for the import tariffs. But economists say costs of the tariffs fall on U.S. businesses and consumers. Trump had indirectly acknowledged the tariffs’ impact by delaying some of them until December 15, 2019.
A study by J.P. Morgan found that Trump’s tariffs will cost the average U.S. household $1,000 a year. That study was done before Trump raised the Sept. 1 and Dec. 15 tariffs on consumer products from 10 to 15 percent. Additionally, Trump imposed 25 percent tariffs on industrial products.
Who are you going to believe? Most American households do not have $1,000 per year in savings, do you?
When two countries trade goods and services, at the end of the year it is common to see one country bought more than the other. When the U.S. buys $550 billion more goods than what China buys, we create a $550 billion deficit. Trump claims China is a terrorist country stealing Americans blind, “we would be better off without China, the vast amounts of money stolen by China from the United States, for decades, will and must STOP. Our great American companies are hereby ordered to immediately start looking for an alternative to China.” Trump does not understand trade deficits and his advisors are afraid to tell him The Great China Caper is a delusion!
When several countries agree to trade, the trade balance is easier to maintain. Without import tariffs, the flow of goods and services grows providing lower prices for all. “The Trans-Pacific Partnership writes the rules for global trade – rules that will help increase Made-in-America exports, grow the American economy, support well-paying American jobs, and strengthen the American middle class,” as stated on the US Trade website. TPP included 12 countries, excluding China. Trump pulled out and left the door open for China.
Trump does not understand trade, he likes one-on-one deals, to get his way, with a weekend at Mar-a-Lago. No deals so far!
U.S. – China trade wars
Stephen Roach, Senior Fellow at Yale University’s Jackson Institute of Global Affairs, formerly Chairman of Morgan Stanley Asia, explains in his book Unbalanced – the Codependency of America and China the danger of trade wars triggering military attacks.
Trading partners from different countries have different levels of economic development, environmental regulations, and labor costs. Their relationships are complex and evolve over time. Trump is looking at 2020, while Chairman Xi Jinping is ruler for life.
The new China
The “Tech Titans of China: how China’s tech sector is challenging the world by innovating faster, working harder, and going global,” explains the rise of China’s biotech, and digital communications.
Trump threatens the world economy
Germany, France, Japan, South Korea, Argentina, Mexico, and other countries are collateral damage. Germany is making new deals with China. With tensions rising between South Korea and Japan, airlines are offering $10 tickets.
The three great lies in U.S. history are, Mexico will pay for the wall, the $1.5 trillion tax cut for corporations and the wealthy will create jobs for Americans, and China will pay 100 percent import tariffs on Chinese products. It could get worse, the tariffs may double, as the Tariff Man has threatened to do.
Seek peaceful trade
Economic evidence has long demonstrated that free trade benefits all nations, increasing their standards of living and wealth, and where all parties benefit from the peaceful activity of trade rather than face the destruction of military wars.
Dr. Luis Contreras