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Big picture: The U.S. is growing rapidly despite a rising trade deficit, reflecting broad strength in key segments of the economy. Gross domestic product expanded by 4.2% in the spring and is forecast to grow 3% in the third quarter.
One reason the deficit keeps rising is counter-intuitive: Americans are financially better off than consumers in most other countries. They can afford to spend more on imports such as French wine or German autos. A stronger dollar also makes imports less expensive to buy.
That’s true - a trade deficit is not necessarily a bad thing. As many people right here on c-d pointed out when Trump was ranting about the US trade deficit being too large during his campaign. Another case of it being OK if a Republican does it?
It's also indicative of a strong dollar compared to other currencies. For instance, in 2011 it costed $1.48 to buy a Euro, now it's $1.15. When the dollar is strong, fewer foreigners can afford to buy American products.
The chinese have devalued the Yuan slightly in response to this as well. Basically Trumps administration is demonstrating that they have no idea what they are doing.
There is only one market —USA
In the big picture- other countries don’t import much -in fact despite our “trade agreements” foreign countries have been blocking -by one means or another -purchase of our goods for decades- despite outrageous prices charged their own citizens- example Japanese rice
If you are like me you will buy all your stuff now before the tariffs kick in -that would make trade deficit jump no?
Last edited by Huckleberry3911948; 09-05-2018 at 12:42 PM..
The next round of tariffs on China was switched to more consumer goods (as opposed to raw materials/industrial).
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Comparative advantage is one of the most important contributions to economics and really to human kind. That Trump thinks trade is a zero sum game is no surprise: the guy has a third grader's understanding of economics and civics.
When David Ricardo came up with his principle or theory of comparative advantage, he assumed that the exchange of gold would keep trade in balance. International trade at that time was mostly through barter or if a country was in a trade deficit, it would settle its account deficit with specie- gold and silver. Fiat currencies were not acceptable in international commerce as they are today.
I see we already have a few of the Trump faithful talking themselves into believing that trade deficits are, when you really think about it, kinda good, right?
I see we already have a few of the Trump faithful talking themselves into believing that trade deficits are, when you really think about it, kinda good, right?
I'm sure we have a few posts where they can get some idea on how deficits aren't always a bad thing....lololol.
They will twist everything just like The Don does...bad is good, good is bad, etc.....
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