When you buy more from the grocery store than the grocery store buys from you, you have a trade deficit with the grocery store.
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This basic economic concept applies to international transactions just as it applies to neighborhood transactions.
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Trade deficits are a feature, not a bug, of a system of voluntary exchange. Only in a (theoretical but not possible) system of total government control and central planning could trade deficits be eliminated—and that would be a world of universal slavery and extreme poverty.
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Milton Friedman said it best. https://youtu.be/zk3ruapRQZk In other words, would you protect the jobs of 1,000 American steel workers at the expense of 10,000 other American jobs that would have otherwise been created?
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I suspect you are taking Friedman out of context. Trump did not inherit a free trade situation. He inherited a mass of others' protectionist entanglements, that predecessors has agreed were OK. "Free" trade works. Lop-sided, thousand-page "trade agreements" are not free trade.
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Whoah! Econ 101! Don’t tell POTUS!
Thanks. Twitter will use this to make your timeline better. UndoUndo
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Better analogy: A competing, gov't subsidized grocery store sells products for less than they cost to purchase so your local grocery store is run out of business. Free trade must be fair trade. Right now, it isn't, and it hasn't been for decades.
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To continue your analogy, your solution is to tax that grocery store so everybody's price is higher. I'll leave it up to for homework to tell me what happens to the consumer in that instance.
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The appeal to a lowest common denominator, "cheap stuff," is what the Chinese, and incidentally, the Multinational corporations that export jobs to that and other slave-wage nations, they hope we fall for. Higher prices for imports mean more will be made locally, BTW.
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Seriously? Trade deficits combined to all countries should not be more than a half trillion dollars. Reciprocal trade agreements is what POTUS is looking to achieve. When that is in place, the deficits will be what they will be because of Fair Trade.
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Reciprocal trade agreement is an oxymoron. One trades something with another to get something they’d rather have—not the SAME thing they already have!
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The term refers to the percentage of tariffs both countries have the same percentage of tariff on ALL different products...not India at 60% and we are at zero. I thought that was obvious.
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POTUS is trying to get favorable trade deals with all countries. The USA has no tariffs or very small percentages on imported goods. He wants the same for our exports to all countries or he will match their tariffs on their goods coming into the USA. He said Mirror & RECIPROCAL.
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This is too complicated for our president to understand
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No, it isn't. Our President has been bitching about trade deficits since the 80s. I won't debate free trade idealism vs pragmatic protectionism. But Trump has been very transparent on how he feels about this - and protecting the working class. It's why he won the rust belt.
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And by his own statements, he shows a complete lack of understanding of economics.
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