Why did you lose the trade wars? Out of niceness? Or is it that when you make survival difficult for people they are forced to buy cheaper imported products even if they do not want to, leaving local manufacturers unable to compete?
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America didn’t lose the trade wars. They never fought it to begin with. The big multinationals and Wall Street lobbied Congress to eliminate tarrifs so they could move production offshore to countries with cheap labor. Congress happily complied and created the current lopsided environment. Trump is absolutely right in trying to correct that imbalance.
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i agree with your second question. Politicians have been saying for years that trade and budget deficits don’t matter. They don’t matter until they do. That is when the markets wake up and realize that the debt is so huge and even with interest rates near zero, can never be paid off. Confidence in the US dollar will collapse and import prices will go through the roof, and will create far more hardship than any tarrifs will.
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I think you have it backwards. What’s leaking is world wide deflation – race to the bottom in terms of cost of production. Because that’s all this ‘free trade’ really is – win for the cheapest provider. Is it any surprise that China has been winning that race – as it produces goods below the real cost of production?
Let China eat its own deflationary tail.
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