The US trade deficit, if based on free/fair competition, would be a quantitative measure of how superior foreign products and workers are compared to ours. In order to win in a free market, you must make a better product at lower cost. This is done with better design, and higher worker productivity.
THIS IS NOT WHY AMERICA HAS A TRADE DEFICIT.
Anyone on TV or radio who suggests Americans just can’t compete, no matter how hard they try, is a liar protecting the interests of those who sign his paycheck.
Foreign workers are not smarter and harder workers. Foreign companies are not more innovative. The truth is that America’s competitors have unfair advantages. Some get outright government subsidies and many do not incur major costs that American companies must absorb such as: cost of clean air; clean water; worker safety measures; worker pensions; worker healthcare; minimum wage mandates.
Nowhere is this more evident than with our two largest trading partners, China & Mexico.
Chronic trade deficits are very bad for countries as:
Americans must buy foreign goods using debt as we have nothing more to trade. If countries should one day refuse to accept our IOUs, we would be unprepared to make the products ourselves and be in great jeopardy. It is not very wise to accept being under the thumb of an enemy like China.
By purchasing goods overseas for a long enough period of time, U.S. companies lose the expertise and even the factories to make those products. As the United States loses competitiveness, it outsources more jobs, and its standard of living declines.
With President Trump's latest efforts, it appears he is attempting to slowly wean America off of foreign dependency. Little by little he will equalize our trade with tariffs. These tariffs simply add to foreign prices the costs US companies incur that the foreign company does not, making import prices free and fair. Then, harder working, more innovative US companies will begin winning the game of competition.
**Note: this is a major threat to America’s merchants who exploit the lack of worker safety and benefits as well as a lack of environmental concerns in far away lands to make products at very low cost, improving profits by $100s of billions. Merchants will not sacrifice these profits without a fight and will use all their power to destroy Trump's effort.
Now, America has an $800 billion trade deficit, which means we buy more than we sell by this amount. What happens in a trade war then? Let’s take a look:
Slowly but surely, as America stops buying foreign products, it must make them itself. The number of US factories and jobs explode – in the end, Americans make $800 billion more stuff each year. This is a big PLUS.
In the foreign land the opposite takes place. The companies sell less and less, requiring factories to close resulting in massive unemployment and social unrest. They sell $800 billion dollars less each year to America, a big MINUS for them.
While this economic shift is taking place there is a large amount of unrest. Our markets must adjust to less demand here, more there. Less rice is sold while more TVs are made; less insurance policies are sold while more high-tech chips are produced….so forth and so on....until supply equals demand in the new marketplace.
POLITICIANS HAVE BEEN SELLING AMERICANS OUT.
President Trump is the first modern President to focus on building our strength, making us safer, lowering our debt, and improving our military defenses. The GOP elite and Communist-Democrats must stop him before government by the People is restored.