Skip to comments.Out of balance: The trade deficit with China is not under control (Pittsburgh Post-Gazette)
Posted on 02/09/2018 6:01:21 PM PST by cba123
Please note, the letter I am quoting here, was penned by the Editorial Board of the Pittsburgh Post-Gazette.
I congratulate them for speaking up. Finally some people are starting to get it.
Here is what they said:
The Department of Commerce's report Tuesday that America's trade deficit in 2017, $566 billion, was the highest since 2008 and had grown 12 percent from 2016 was either a disappointment for the first year of Donald Trump's presidency, or didnt matter, depending on one's interpretation of the significance of that figure.
Even worse, considering campaign rhetoric, the United States' trade deficit with China, $375 billion, was the highest on record and up 8 percent from $347 billion in 2016. Mr. Trump recently imposed tariffs on imports from China of washing machines and solar panels, to seek to push the trade deficit toward balance.
(please see the full article at the link)
(Excerpt) Read more at post-gazette.com ...
This issue has not yet been thought through by the White House or the Congress, unless America would like to just take a passive, "international trade and globalization are normal," approach to the problem. The trouble with that is fewer jobs at home and China overtaking us shortly as the world's top economic power. Does this matter? We need to figure it out and take action if it does.
I keep saying the Democrats didn’t destroy cities like Detroit. The Globalist Free Traitors in the GOPe destroyed Detroit. The Democrats are just vultures picking at the corpse.
Amazing how this is being ignored by our fellow Freepers....
There is a (large) number of people on this website, who seem to be 100% soldout to China. Especially now, during the day here in Asia and the middle-east. They were making money in the market. So they were happy.
End of discussion.
There was also a big contingent of “American” investors, who sold their operations to China, for a 49% share of the now-Chinese operations. Or likewise in latin America. A lot of those people are on here, also. The Bushes, and all the democrats, were also in this bunch in my view.
It may change, if the market goes lower. Then they may no longer be so unconcerned with others.
But I agree. There are a bunch of people on this website, who could really stand to be more pro-American in their business views.
We need to restore the import tariffs. It would provide important revenues to help prevent increasing the deficit due to the tax cuts.
But it’s going to be a huge political battle. You have the free traitors, the moneyed interests that have gotten rich selling out America, China and other countries who have a vested interest in maintaining free access to sell into the American market.
I was surprised they passed a tax cut package without the counter balance of trade deficits. Doing both together would have reduced the chance of high budget deficits.
They may be waiting for high budget deficits to occur to make the case for raising the tariffs.
But if the economy grows sufficiently due to the tax cuts, it’s not clear that the budget deficits will get significantly worse even without the tariffs. But we still need them in place.
We need a tariff true but tax cuts INCREASE federal revenue year over year. Check Federal revenue next January for FY18 it will greater then the revenue collected in FY17. Guarantee it.
Even if President Trump is able to negotiate a trade deal with China that gives us absolutely equal access to Chinese markets, there will still likely be a trade deficit.
This is only because China is still a very poor country. Even though its GDP is supposedly nearly equal to ours, that GDP reflects the output and consumption of nearly four times as many people.
In other words, Chinese GDP per capita is 1/4 America's.
The Chinese can't afford to buy as much as we can.
Going back to the Laffer curve: We know that at a tax rate of 0% government revenues are $0. And that at at tax rate of 100% government revenues are $0. And that there is a curve in between those two points. We don't actually know what the curve looks like. So it's hard to predict what will actually happen to Federal Revenues.
If the actual curve looks like the red curve we will likely increase. If the curve looks more like the blue curve we will decrease. In either case GNP goes up, but does it go up enough to offset the decrease in the tax rate?
Historically tax revenue balloon when rates are reduced. Check 1960’s and 1980’s.
The Chinese have a middle class that is bigger than ours. It is estimated that their middle class is 200 million. They have plenty of money to buy our products.
Yeah that’s two examples. And I hope it does the same thing this time. But there are no guarantees. Nobody really knows what the laffer curve looks like. Clearly there is a point as you continue to reduce rates that tax revenue will start to fall. I think revenuews will increase this time too.
Will the economy grow faster than jobs are being siphoned off to offshoring? I don’t know. Will it be a quality economy? I don’t know.
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