I have a trade deficit with M&S & Sainsbury's among others. I buy most of my food & household goods from them. I must have spent a fortune over the years. But they don't reciprocate, they don't buy anything from me. So I'm really p..... off. I think I should operate tariffs against them. The fact that I don't make anything they might want to buy is immaterial. A trade deficit is unfair & annoying. I feel badly mistreated.
That is the "logic" behind what Trump has done with tariffs worldwide. He certainly didn't base them on a combination of existing tariffs and other trade barriers (like regulations). He had a mathematical formula
that no one had ever heard of which took the trade deficit for the US in goods with a particular country, divided by the total goods imports from that country and then divided that number by two. He simply thought he could eliminate the US's goods trade deficit with each country. Unbelievable!
Americans spend and invest more than they earn. The US buys more from the world than it sells. As long as that continues, the US will continue to keep running a deficit despite increasing tariffs with global trading partners. The "great deal maker" simply doesn't understand economics & trade. Worse still, if there are any dissenting voices, & there are, he doesn't listen. All he listens to is the sycophants who actually clap him in televised cabinet meetings. It's all about ego & image.
Thomas Sampson of the London School of Economics said: "There is no economic rationale for doing this and it will cost the global economy dearly." He is not alone.
The markets showed Trump exactly what they thought of his tariffs. Stocks plummeted. Trump panicked & there is a 90 day pause for everyone except China. He is in a trade war with China now. Good luck with that Trumpy.
This is all very unstable & seat of the pants / back of an envelope stuff. The markets don't like instability. They want to plan years ahead. You don't invest in a new factory or new machinery if the world is unstable. You batten down the hatches.
Meanwhile people lose jobs & things cost more. Just what America voted for!
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