Trump’s big mistake on trade
https://finance.yahoo.com/news/trump...183849840.html
Trump’s logic is faulty. “It’s economically ignorant,” says economist Donald Boudreaux of George Mason University. “We’re not giving foreigners anything. We’re buying things from them that we think are good deals. It’s a total myth to think the trade deficit is somehow a drain on our assets or a drain on aggregate demand from the US economy.”
Trade is complicated, and Trump’s real interest seems to be protecting jobs in industries where production has shifted to China and other countries during the last several decades. The idea behind tariffs is that taxing imports will make them more expensive, making domestically produced goods more affordable by comparison. So consumers will buy more domestic stuff, in theory, which should boost the number of jobs for workers who make that stuff.
Reality is messier, as we are in the midst of learning. In response to the tariffs Trump wants to levy on Chinese imports, China has said it will impose similar tariffs on US imports to China. So products are getting more expensive in both countries, which will lead millions of consumers and thousands of businesses to change what they buy. The potential upheaval has pushed stock prices down and triggered fears of escalating protectionism. “The China-US tariffs war is alarming,” David Kotok, chairman of financial firm Cumberland Investors, wrote to clients on April 4.
“Trump’s trade policy is failing and harming the United States.”