Trump will renegotiate NAFTA and "break-up" with China?
I get it. America is a power house on many levels. America has a lot of political and military sway. But, I thought Trump was a businessman. These points from his campaign are, however, fiscal lunacy.
Let me explain something to you. The USA is the worlds SINGLE LARGEST EXPORTER. You export almost a trillion more dollars worth than you import. Great, huh? Well, sure, except, that means that a positively MASSIVE portion of your economy DEPENDS on trade deals being appealing enough to those other countries that they will continue buying up what you're exporting, and at the volumes you're currently exporting them.
On the import side, you're the second largest economy in the world. Again, trade deals are important to keep your prices at a place where other countries are convinced it is worth selling the goods to Americans and Americans are willing to pay the prices to get them.
Getting the picture? The fact that you are such a massive player in the global import/export market actually makes you LESS powerful at bargaining. And, two of those largest trading partners are countries Trump has "threatened" in a sense with his platform; Canada and China. I just like to toss Canada in there for shiggles. We are a big trading partner. But nothing compared to China. And worst of all, that relationship is much more one sided. The US is more dependent on Chinese imports than China is on American imports, and there are plenty of other countries catching up technologically and culturally to the US that could absorb what China is exporting than the other way around.
At the end of the day, trade agreements are likely bartering in international monopolies. "You tax this, we'll tax that, in exchange, these things you're really good at we'll let in for free, if you let us ship in these things we're really good at."
I'm not saying renegotiating wouldn't be a bad idea. But to think any country is going to come out of such deal substantially better off than the others is insane. A lopsided agreement would ruin economies and no country would agree to that. The alternative is simpler... no deals and we just slap tariffs on everything. Also, no country should want a lopsided deal. Remember, the US needs its trading partners to buy its exports. If a lopsided deal ruins the other economy, it won't be long until the other country can't afford your exports.
Back to renegotiating being good though. No one really knows how a trade agreement will pan out until it is implemented. One country may have bartered for better deals in a certain industry, only to find it couldn't scale with the demand and didn't end up helping as much as expected. Or, the markets shifted afterwards and the demand dropped. So, yeah, renegotiating provides all parties a chance to rectify mistakes only discovered after the deals were implemented. But, Trump is NOT going to succeed in getting a "much better" bargain for American workers.
The only place where, what Trump wants, works out is if you're Germany. And that is because their trade partners are handcuffed by the EU and because Germany then ends up funneling some of that money back in, in the form of stimulus packages.
Outside of the EU, if America were to negotiate much better trade agreements, it would simply bleed his trading partners dry. Eventually, those deals which made things better for a short period would take their toll and the net effect would be a far worse state of affairs.
Trade is, by it's nature dependent on both parties getting something of value. Stable trade relationships are founded upon attempting to get as close as possible to an equitable trade agreement for all involved. You can't violate that AND succeed long term. You can only have one or the other.
Let me explain something to you. The USA is the worlds SINGLE LARGEST EXPORTER. You export almost a trillion more dollars worth than you import. Great, huh? Well, sure, except, that means that a positively MASSIVE portion of your economy DEPENDS on trade deals being appealing enough to those other countries that they will continue buying up what you're exporting, and at the volumes you're currently exporting them.
On the import side, you're the second largest economy in the world. Again, trade deals are important to keep your prices at a place where other countries are convinced it is worth selling the goods to Americans and Americans are willing to pay the prices to get them.
Getting the picture? The fact that you are such a massive player in the global import/export market actually makes you LESS powerful at bargaining. And, two of those largest trading partners are countries Trump has "threatened" in a sense with his platform; Canada and China. I just like to toss Canada in there for shiggles. We are a big trading partner. But nothing compared to China. And worst of all, that relationship is much more one sided. The US is more dependent on Chinese imports than China is on American imports, and there are plenty of other countries catching up technologically and culturally to the US that could absorb what China is exporting than the other way around.
At the end of the day, trade agreements are likely bartering in international monopolies. "You tax this, we'll tax that, in exchange, these things you're really good at we'll let in for free, if you let us ship in these things we're really good at."
I'm not saying renegotiating wouldn't be a bad idea. But to think any country is going to come out of such deal substantially better off than the others is insane. A lopsided agreement would ruin economies and no country would agree to that. The alternative is simpler... no deals and we just slap tariffs on everything. Also, no country should want a lopsided deal. Remember, the US needs its trading partners to buy its exports. If a lopsided deal ruins the other economy, it won't be long until the other country can't afford your exports.
Back to renegotiating being good though. No one really knows how a trade agreement will pan out until it is implemented. One country may have bartered for better deals in a certain industry, only to find it couldn't scale with the demand and didn't end up helping as much as expected. Or, the markets shifted afterwards and the demand dropped. So, yeah, renegotiating provides all parties a chance to rectify mistakes only discovered after the deals were implemented. But, Trump is NOT going to succeed in getting a "much better" bargain for American workers.
The only place where, what Trump wants, works out is if you're Germany. And that is because their trade partners are handcuffed by the EU and because Germany then ends up funneling some of that money back in, in the form of stimulus packages.
Outside of the EU, if America were to negotiate much better trade agreements, it would simply bleed his trading partners dry. Eventually, those deals which made things better for a short period would take their toll and the net effect would be a far worse state of affairs.
Trade is, by it's nature dependent on both parties getting something of value. Stable trade relationships are founded upon attempting to get as close as possible to an equitable trade agreement for all involved. You can't violate that AND succeed long term. You can only have one or the other.
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