Trump Dump: Foreign Policy (Thread I)

[LaCroix]

Why would a world be unipolar if it looses trust in the US and instead talk more to each other and try to work around a sometimes untrustworthy partner? The rest of the world has been multipolar for a long time, just the USA has rarely participated in that.

[Simon_Jester]

A unipolar world is never going to be as good or stable an arrangement of things as a multipolar one.

Neither is going to be stable - nor the imperialism of many great powers, neither the imperialism of two or one great superpowers, all such configurations are objectively lacking stability.

...Do I need to provide a grammar lesson on the role of the word 'as' in comparisons in the English language?

Or was this just a fully generic attempt to contradict me?

Why would a world be unipolar if it looses trust in the US and instead talk more to each other and try to work around a sometimes untrustworthy partner? The rest of the world has been multipolar for a long time, just the USA has rarely participated in that.

For the record, this is basically my point. A unipolar world is inherently not a good arrangement, for precisely the reasons that Trump is making obvious. No nation is immune to stupidity.

[K. A. Pital]

Multipolar world is just another name for imperialistic competition, though, and that was my point.

We had the “many great powers” eras already. We know how they ended.

It should not be interpreted as defense of American hegemony, but there is nothing inherently superior about multipolarity, except that it is preferrable for the advancement of history in terms of progress, because it intensifies contradictions inside and between nations. A unipolar imperialistic “pax Americana” is trying to soften them and stop the historical process with a universal “end of history”,but in this endeavour it has already failed.

[Tribble]

So, here's how the G7 G6 + pouting Trump meeting went:

Trump told Macron EU worse than China on trade

(CNN)President Donald Trump told French President Emmanuel Macron that the European Union is worse than China on trade during a conversation that portended the tense end to this year's G7 summit.

In a meeting at the White House during the French president's visit to Washington in April, Macron suggested the United States and France should work together to resolve shared trade problems with Beijing, prompting Trump to make his remark, a person in the room told CNN.

Trump told Macron during their meeting in Washington that there are too many German cars in the United States, the source previously told CNN. The source did not say Trump explicitly said he wanted all German-made cars out of the US. Trump focused his conversation with Macron on German trade for about 15 minutes in the one-hour meeting.

Trump has been on a tear about German trade and cars in particular, bringing up the issues with other European leaders with whom he has met over the last few months, the source said.

The details of the conversation, which Axios previously reported, come amid fears of a looming trade war over the Trump administration's move to impose steep tariffs on steel and aluminum imports from the European Union, Canada and Mexico. Those tensions boiled over during the G7 summit in Canada on Saturday, with Canadian Prime Minister Justin Trudeau and European leaders reaffirming plans to institute retaliatory measures and Trump lashing out in response by refusing to endorse the group of industrialized nations' communique.

That, in turn, prompted harsh reactions from European officials and members of Congress, including Republican Sen. John McCain, who said Americans would continue to stand with the nation's historical allies.

"To our allies: bipartisan majorities of Americans remain pro-free trade, pro-globalization & supportive of alliances based on 70 years of shared values," the Arizona senator tweeted. "Americans stand with you, even if our president doesn't."

Senior Trump aides escalated the rhetoric on Sunday morning's news shows, with chief economic adviser Larry Kudlow calling Trudeau's remarks "a betrayal" on CNN's "State of the Union" and top trade adviser Peter Navarro saying on "Fox News Sunday" that "there's a special place in hell" for the Canadian leader.

Trump, who is in Singapore for negotiations with North Korea, continued to rip into US trading partners late Sunday night Eastern Time, repeating complaints about the US trade deficit and contributions to NATO.

"Fair Trade is now to be called Fool Trade if it is not Reciprocal," Trump wrote in a series of posts on Twitter. "According to a Canada release, they make almost 100 Billion Dollars in Trade with U.S. (guess they were bragging and got caught!). Minimum is 17B. Tax Dairy from us at 270%. Then Justin acts hurt when called out!"

"Why should I, as President of the United States, allow countries to continue to make Massive Trade Surpluses, as they have for decades, while our Farmers, Workers & Taxpayers have such a big and unfair price to pay?" the President continued. "Not fair to the PEOPLE of America! $800 Billion Trade Deficit ... And add to that the fact that the U.S. pays close to the entire cost of NATO-protecting many of these same countries that rip us off on Trade (they pay only a fraction of the cost-and laugh!). The European Union had a $151 Billion Surplus-should pay much more for Military!"

In other words, it did not go well.

It'll be interesting to see how much of a contrast the North Korean meeting will be; Trump and Kim Jun Un will probably get along just fine.

[mr friendly guy]

Senior Trump aides escalated the rhetoric on Sunday morning's news shows, with chief economic adviser Larry Kudlow calling Trudeau's remarks "a betrayal" on CNN's "State of the Union" and top trade adviser Peter Navarro saying on "Fox News Sunday" that "there's a special place in hell" for the Canadian leader.

Is that special place in the hell the place where they have gay rights, treat women as human beings and don't do silly things like ban the eating of shellfish, you know, those things the Bible abhors. Because then Trudeau would feel right at home. Aside from the weather, being Canadian and all that entails, he most probably is used to the cold climate rather than the warm fires of perdition.

I was going to post this, but Tribble beat me to it. Peter Navarro is that idiot China hawk who doesn't understand how trade works as I explained several pages ago in this page. From what I have read, he has lost a lot of power in the administration (bet he didn't see China bribing doing a deal with Trump to minimise some of Trump's policies towards them) and now IMO is trying to get some influence back by licking Trump's boots, at the expense of America's allies. Good job.

[Crazedwraith]

Forgive the stupid question: Are these massive deficits Trump talks about real? Are they actually a problem? Or a quid pro quo that America gets equal value out of in some other area?

[mr friendly guy]

When you're the world's reserve currency, you kind of end up with trade deficits

https://en.wikipedia.org/wiki/Triffin_dilemma

The Triffin dilemma or Triffin paradox is the conflict of economic interests that arises between short-term domestic and long-term international objectives for countries whose currencies serve as global reserve currencies. This dilemma was first identified in the 1960s by Belgian-American economist Robert Triffin, who pointed out that the country whose currency, being the global reserve currency, foreign nations wish to hold, must be willing to supply the world with an extra supply of its currency to fulfill world demand for these foreign exchange reserves, thus leading to a trade deficit.

The use of a national currency, such as the U.S. dollar, as global reserve currency leads to tension between its national and global monetary policy. This is reflected in fundamental imbalances in the balance of payments, specifically the current account, as some goals require an outflow of dollars from the United States, while others require an overall inflow.

Specifically, the Triffin dilemma is usually cited to articulate the problems with the role of the U.S. dollar as the reserve currency under the Bretton Woods system. John Maynard Keynes had anticipated this difficulty and had advocated the use of a global reserve currency called 'Bancor'. Currently the IMF's SDRs are the closest thing to the proposed Bancor but they have not been adopted widely enough to replace the dollar as the global reserve currency.

In the wake of the financial crisis of 2007–2008, the governor of the People's Bank of China explicitly named the reserve currency status of the US dollar as a contributing factor to global savings and investment imbalances that led to the crisis. As such the Triffin Dilemma is related to the Global Savings Glut hypothesis because the dollar's reserve currency role exacerbates the U.S. current account deficit due to heightened demand for dollars.

Basically high demand for the US dollar (since its the reserve currency) and that appreciates it, makes exports less competitive and imports more attractive, which can lead to a trade deficit.

I will talk more when I have time. However, I think we all know the US doesn't want to give up its status as reserve currency. Numerous people, eg keynes and in modern times nations eg China and Russia has proposed another reserve currency (govern by the IMF). Don't think its going anywhere.

[Kane Starkiller]

Is there any actual mathematical analysis of the balance of tarrifs between US and other countries? Most of the articles out there seem to be more interested in psychoanalyzing Trump than in performing an economic analysis.

I've found some data in this article and this article:
EU/US tarrifs
Consumer electronics and video 13.8%/1.1% +12.7%
Passenger cars 9.9%/2.5% +7.4%
Leather articles 4.1%/9.1% -5.0%
Semi-finished aluminum 7.5%/2.8% +4.7%
Cork products 4.6%/0.0% +4.6%
Trucks and buses 10.5%/14.9% -4.4%
Other Vehicles (such as motorcycles and bicycles) 5.0%/0.9% +4.1%
Textiles 6.5%/7.9% -1.4%
Agriculture 11.1%/5.2% +5.9%

In most categories EU tariffs are larger (and sometimes much larger) than US tariffs. Of course we would have to do a weighted analysis to figure out whether +7.4% tarrif on "Passenger cars" is outwheighted by -4.4% tarrif on "Trucks and buses" but eyeballing it it seems that currently the tarrifs are skewed against US.

So what are the details of these negotiations? Did EU representatives offer to equalize these tarrifs? Or does US demand that tarrifs now skew in their favor?

[mr friendly guy]

Here is my layman's take on trade deficits. They are not a problem in and of themselves, but could be an indicator or some underlying problem elsewhere. For example, I have a "trade deficit" with McDonalds. Is that a problem? Should I demand McDonald's employees buy products from me.

If I continually rack up deficits with Macca's, it could be an indication of a spending problem, that I am spending too much on Macca's products. That is certainly not the fault of McDonalds and demanding they send their employees buy products from me so I can have more money to spend at McDonalds kind of looks silly. The underlying problem is with my spending.

It could also be a problem, if my trade deficit with McDonald's is due to some unfair competition from Maccas. So if they muscled out the competition leaving them the only source of take away food, then that is also a problem.

If I don't have a spending problem, then my deficit with McDonalds is simply a reflection that I buy more stuff from them, then they buy from me. In other words, not a problem.

Translating this to trade between country, the trade deficit could indicate, the US simply likes buying more goods from that other country at current prices than what that other country buys. For example, Trump talked about German luxury cars. I am no car expert, but its not inconceivable to me with what little I know, that Germans simply have Americans beat on branding and/or quality for their luxury cars.

Another indication is that America simply spends a lot. They are buying more than their own producers can make, so they have to source it from overseas. American has a spending problem, say it ain't so. Using the example of Canadian steel and aluminum, the US cannot produce sufficient amounts for their own needs, so they must buy it elsewhere. Now if they didn't need such a big military or wanted to spend it, then they wouldn't need so much steel and aluminum and have a smaller trade deficit.

The third possibility, is that the other side is using some form of unfair competition. Like my McDonald's example, its bad because it can cause monopoly and it distorts efficiency, ie the side that has the winning product isn't really the most efficient producer. This is obviously what Trump would want to argue, but its complicated, because AFAIK, trade agreements do allow some limited form of protectionism, which is what Trump is trying to justify, but he does it in such a retarded manner by labelling Canada a security risk. Obviously they can use protectionism against countries judged to be a security risk, but seriously, Canada?

I can go on about how all countries use some form of protectionism eg the EU uses tariffs on Chinese bikes but demands African countries remove theirs on agriculture goods, and how protectionism arguably is necessary when a country is just setting up that industry - eg African producers of agricultural products are now facing the problem of having their production capacity reduced from cheaper European agriculture products before they become efficient at it. Fun fact, the industrialised countries engaged in protectionism against each other before they became as efficient as they are today). The question is, are any of US trading partners who they want to put a tariff on, have a trade surplus with the US due to any unfair practices or any practices which both sides agreed not to use? I very much doubt it, which may be why Trump is using the "security risk" argument.

Note even China which is a favourite target of US politicians facing relection, and decried as a currency manipulator, fails to match the US own criteria for identifying currency manipulators (against the US, their criteria doesn't count the US doing the same thing).

[Kane Starkiller]

If my brother is a farmer and McDonalds refuses to buy beef from him or imposes tariffs then yes I might consider that a problem and maybe go to Burger King in protest.

To be sure of all the major countries in the world US has the least amount of exposure to international trade: total imports/exports are 20% of US GDP compared to 30% for China, 26% for Japan, 65% for Germany or 45% for Canada.
As far as export/GDP ratio goes it's: 8% for US, 16% China, 14% Japan, 36% Germany and 21% Canada.
This makes it very clear which country stands to loose the least in case of an escalating trade war.

But still this doesn't explain why so many media outlets are calling this THE END OF THE WEST when we are talking about fudging with various tarrifs that already exist.
Yes kids that was the Golden Age of the West. It all came crashing down when passenger car tariffs went from 1:4 in Germany's favour to 2:1 in US favour.

[Tribble]

Forgive the stupid question: Are these massive deficits Trump talks about real? Are they actually a problem? Or a quid pro quo that America gets equal value out of in some other area?

With regards to Canada, here is some info from the Office of the United States Trade Representative:

U.S.-Canada Trade Facts

U.S. goods and services trade with Canada totaled an estimated $673.9 billion in 2017. Exports were $341.2 billion; imports were $332.8 billion. The U.S. goods and services trade surplus with Canada was $8.4 billion in 2017.

However, the international shipment of non-U.S. goods through the United States can make standard measures of bilateral trade balances potentially misleading. For example, it is common for goods to be shipped through regional trade hubs without further processing before final shipment to their ultimate destination. This can be seen in data reported by the United States’ two largest trading partners, Canada and Mexico.

The U.S. data report a $17.5 billion goods deficit with Canada in 2017, and a $71.1 billion goods deficit with Mexico. Both countries, however, reported substantially larger U.S. goods surpluses in the same relationship. In 2017, Canada reported a $97.7 billion surplus, and Mexico a $132.4 billion surplus.

This reflects the large role of re-exported goods originating in other countries (or originating in one NAFTA partner, arriving in the United States, and then returned or re-exported to the other partner without substantial transformation). U.S. statistics count goods coming into the U.S. customs territory from third countries and being exported to our trading partners, without substantial transformation, as exports from the United States. Canada and Mexico, however, count these re-exported goods as imports from the actual country of origin. In the same way, Canadian and Mexican export data may include re-exported products originating in other countries as part of their exports to the United States, whereas U.S. data count these products as imports from the country of origin. These counting methods make each country’s bilateral balance data consistent with its overall balance, but yield large discrepancies in national measures of bilateral balance. It is likely that a measure of the U.S. trade deficit with Canada and Mexico excluding re-exports in all accounts would be somewhere in between the values calculated by the United States and by our country trading partners.

Canada is currently our 2nd largest goods trading partner with $582.4 billion in total (two way) goods trade during 2017. Goods exports totaled $282.5 billion; goods imports totaled $300.0 billion. The U.S. goods trade deficit with Canada was $17.5 billion in 2017.

Trade in services with Canada (exports and imports) totaled an estimated $91.5 billion in 2017. Services exports were $58.7 billion; services imports were $32.8 billion. The U.S. services trade surplus with Canada was $25.9 billion in 2017.

According to the Department of Commerce, U.S. exports of Goods and Services to Canada supported an estimated 1.6 million jobs in 2015 (latest data available) (1.2 million supported by goods exports and 360 thousand supported by services exports).
Exports

Canada was the United States' largest goods export market in 2017.

U.S. goods exports to Canada in 2017 were $282.5 billion, up 5.9% ($15.7 billion) from 2016 and up 13.5% from 2007. U.S. exports to Canada are up 181% from 1993 (pre-NAFTA). U.S. exports to Canada account for 18.3% of overall U.S. exports in 2017.

The top export categories (2-digit HS) in 2017 were: vehicles ($51 billion), machinery ($42 billion), electrical machinery ($25 billion), mineral fuels ($19 billion), and plastics ($13 billion).

U.S. total exports of agricultural products to Canada totaled $24 billion in 2017, our largest agricultural export market. Leading domestic export categories include: prepared food ($1.9 billion), fresh vegetables ($1.9 billion), fresh fruit ($1.6 billion), snack foods nesoi ($1.3 billion), and non-alcoholic bev. (ex. juices) ($1.1 billion).

U.S. exports of services to Canada were an estimated $58.7 billion in 2017, 8.8% ($4.8 billion) more than 2016, and 37.6% greater than 2007 levels.

It was up roughly 245% from 1993 (pre-NAFTA). Leading services exports from the U.S. to Canada were in the travel, intellectual property (computer software, audio visual), and professional and management services sectors.
Imports

Canada was the United States' 3rd largest supplier of goods imports in 2017.

U.S. goods imports from Canada totaled $300.0 billion in 2017, up 8.0% ($22.2 billion) from 2016, but down 5.4% from 2007. U.S. imports from Canada are up 170% from 1993 (pre-NAFTA). U.S. imports from Canada account for 12.8% of overall U.S. imports in 2017.

The top import categories (2-digit HS) in 2017 were: mineral fuels ($73 billion), vehicles ($56 billion), machinery ($21 billion), special other (returns) ($14 billion), and plastics ($11 billion).

U.S. total imports of agricultural products from Canada totaled $22 billion in 2017, our 2nd largest supplier of agricultural imports. Leading categories include: snack foods ($4.2 billion), red meats, fr/ch/fr ($2.3 billion), other vegetable oils ($2.0 billion), processed fruit & vegetables ($1.5 billion), and fresh vegetables ($1.4 billion).

U.S. imports of services from Canada were an estimated $32.8 billion in 2017, 9.5% ($2.8 billion) more than 2016, and 27.6% greater than 2007 levels. It was up roughly 260% from 1993 (pre-NAFTA). Leading services imports from Canada to the U.S. were in the travel, transportation, and telecommunications, computer, and information services sectors.

Trade Balance

The U.S. goods trade deficit with Canada was $17.5 billion in 2017, a 59.7% increase ($6.5 billion) over 2016.

The United States has a services trade surplus of an estimated $26 billion with Canada in 2017, up 8.0% from 2016.
Investment

U.S. foreign direct investment (FDI) in Canada (stock) was $363.9 billion in 2016 (latest data available), a 5.0% increase from 2015. U.S. direct investment in Canada is led by manufacturing, nonbank holding companies, and finance/insurance.


Canada's FDI in the United States (stock) was $371.5 billion in 2016 (latest data available), up 15.3% from 2015. Canada's direct investment in the U.S. is led by manufacturing, finance/insurance, and wholesale trade.

Sales of services in Canada by majority U.S.-owned affiliates were $121.3 billion in 2015 (latest data available), while sales of services in the United

States by majority Canada-owned firms were $100.0 billion.

https://ustr.gov/countries-regions/americas/canada

Short version: using the USA's own accounting methods, if you look at just goods, the USA has ~$10 billion deficit. However if you look at both goods and services, the USA has ~$8.4 billion trade surplus.

Given the sheer amount of trade of goods and services between the two, which is currently ~$673 billion per year, either way the trade balance is little more than a rounding error.

~1.6 million American jobs are dependant on trade with Canada. Yes, the USA can hurt Canada more than vice-versa, but they wouldn't get away Scot-free in a trade war. Not that Trump cares, of course.

[mr friendly guy]

If my brother is a farmer and McDonalds refuses to buy beef from him or imposes tariffs then yes I might consider that a problem and maybe go to Burger King in protest.

I largely agree with this sentiment with just some exceptions. If your brother's competitor has a better reputation for quality beef, then yeah I wouldn't fault McDonald's for not buying from your brother. Again this is sort of like US and German cars, something Trump has complained about. Even a non car enthusiast like me knows that European cars, particularly Germany have a reputation for quality. My knowledge of American cars is that they are losing money and some major companies have to be bailed out or declare bankruptcy. This doesn't inspire confidence.

I would agree with the tariff sentiment aside from the conditions where a country is entitled to put it up (ie both countries have a trade agreement governing when tariffs can come up) or to protect a nascent industry (eg African agricultural products, which in real life have taken a hit due to trade barriers coming down and competing against EU subsidised products).

To be sure of all the major countries in the world US has the least amount of exposure to international trade: total imports/exports are 20% of US GDP compared to 30% for China, 26% for Japan, 65% for Germany or 45% for Canada.
As far as export/GDP ratio goes it's: 8% for US, 16% China, 14% Japan, 36% Germany and 21% Canada.
This makes it very clear which country stands to loose the least in case of an escalating trade war.

I think its a bit more complicated than that. The economy is not just imports and exports, but also consumption. If the US imports less because of trade barriers, they also take a hit in their consumption sector, after all, those made in China stuff aren't just sitting in a warehouse doing nothing, they are being sold at Walmarts. They aren't being sold at the same amount they purchased it from China, they are going to be sold at higher amount so Walmart makes a nice profit. Given the amount it imports, less imports is definitely going to take a hit on consumption unless its own domestic industry can somehow compensate.

Looking at the figures, US is 67% consumption, China is 39%, Japan is 55%, Germany 54%, and Canada 58%. So any advantage to being less exposed to international trade, may very well be offset by the fact it consumes a lot more products.

But still this doesn't explain why so many media outlets are calling this THE END OF THE WEST when we are talking about fudging with various tarrifs that already exist.

Beats me. Although a trade war could potentially plunge us into another recession. Or rather it will plunge you guys into another recession. Australia avoided it during the 2008/09 financial crisis. We might not be so capable of avoiding it this time round.

[Solauren]

The other thing that makes trade deficits is you really need to account for population levels as well.

Canada has a population of 32 million people (or so)
The US has a population of 323 million. Roughly 10 times the population of Canada.

Of course Canada is not going to buy as much from the US as the US buys from Canada.
We don't have the population to buy that much crap!

[Kane Starkiller]

I largely agree with this sentiment with just some exceptions. If your brother's competitor has a better reputation for quality beef, then yeah I wouldn't fault McDonald's for not buying from your brother. Again this is sort of like US and German cars, something Trump has complained about. Even a non car enthusiast like me knows that European cars, particularly Germany have a reputation for quality. My knowledge of American cars is that they are losing money and some major companies have to be bailed out or declare bankruptcy. This doesn't inspire confidence.

I would agree with the tariff sentiment aside from the conditions where a country is entitled to put it up (ie both countries have a trade agreement governing when tariffs can come up) or to protect a nascent industry (eg African agricultural products, which in real life have taken a hit due to trade barriers coming down and competing against EU subsidised products).

It is perfectly possible for German cars to be better than US cars and for there to be an unfair tariff advantage. I certainly don't think that if you equalized tariffs Europe would suddenly be flooded with US cars or something but it likely would influence the trade balance.
From WTO here is the Most Favoured Nation trade weighted tariff average for certain countries:

Japan 2.1%
US 2.4%
EU 3%
Canada 3.1%
Australia 4%
China 4.4%
Mexico 4.5%
South Korea 6.9%

If EU and Canada are so much more reasonable than US than how about equalizing tariffs?
Would equalizing tariffs between US, Canada, EU and China eliminate US trade deficit? I find that unlikely, but it is likely that it would decrease it to a degree.

I think its a bit more complicated than that. The economy is not just imports and exports, but also consumption. If the US imports less because of trade barriers, they also take a hit in their consumption sector, after all, those made in China stuff aren't just sitting in a warehouse doing nothing, they are being sold at Walmarts. They aren't being sold at the same amount they purchased it from China, they are going to be sold at higher amount so Walmart makes a nice profit. Given the amount it imports, less imports is definitely going to take a hit on consumption unless its own domestic industry can somehow compensate.

Looking at the figures, US is 67% consumption, China is 39%, Japan is 55%, Germany 54%, and Canada 58%. So any advantage to being less exposed to international trade, may very well be offset by the fact it consumes a lot more products.

Well yes the economy is not just imports and exports that was the point. Total imports plus exports is 20% of US economy but 65% of German economy or 30% of Chinese economy. Which is why US is less exposed to disturbances in international trade.
The fact that in China only 39% is personal consumption underscores how weak the middle class is in China and how much more dependant China is on trade than US.

Beats me. Although a trade war could potentially plunge us into another recession. Or rather it will plunge you guys into another recession. Australia avoided it during the 2008/09 financial crisis. We might not be so capable of avoiding it this time round.

US crisis was self inflicted and then it reverberated throughout the world which simply went on to prove that when US sneezes the rest of the world catches pneumonia. It doesn't really go the other way around precisely because with just 8% of GDP in exports US is highly resistant to outside crises. Which would actually be the biggest objection to Trump's drive for exports: it would make US more susceptible to crises in export markets.

All of this makes it clear how laughable the plans for EU/China/Canada to go it alone and isolate the US are. Who is going to be the "United States" of that relationship? Who is going to be the side with a gigantic internal market ($20 trillion economy 70% of which is consumption) willing to run a gigantic trade deficit and soak up the exports? Germany? China? Canada? Fat chance.

[mr friendly guy]

It is perfectly possible for German cars to be better than US cars and for there to be an unfair tariff advantage. I certainly don't think that if you equalized tariffs Europe would suddenly be flooded with US cars or something but it likely would influence the trade balance.



If EU and Canada are so much more reasonable than US than how about equalizing tariffs?
Would equalizing tariffs between US, Canada, EU and China eliminate US trade deficit? I find that unlikely, but it is likely that it would decrease it to a degree.

I very much doubt it will change so much for Europe / US trade in cars. US cars are popular in China, not so much in Europe. Sure it may help a little bit, but not much. But I think we largely agree on this point, it will increase the number of US cars sold to Europe, but not much.

Well yes the economy is not just imports and exports that was the point. Total imports plus exports is 20% of US economy but 65% of German economy or 30% of Chinese economy. Which is why US is less exposed to disturbances in international trade.
The fact that in China only 39% is personal consumption underscores how weak the middle class is in China and how much more dependant China is on trade than US.

I think you misunderstand. Of course the economy is more than imports and exports, however the other components are not necessarily totally independent of each other. What affects imports also affect consumption, and the US is particularly vulnerable in the latter area. This is not just me saying this, various economists argue about this. For example when Obama raised tariffs on Chinese rubber (for tyres), to protect the US domestic industry, it affected consumption elsewhere because people paid more for tyres meaning they had less to spend elsewhere. It was argued it was cheaper to put those tyres workers on welfare equivalent to their pay and continue to import Chinese tyres.

However I have a better argument, and believe it or not, you gave me the idea when you talked about other countries isolating the US on trade. After that, I thought, do the numbers allow them to do so.

You see, you might be able to apply the US total trade as a percentage of its GDP and argue it will only be affected so and so, but you're stretching it apply the same to the US trading partners. The reason is, the US is hell bent on putting more barriers against everybody else, but everybody else is only putting barriers against the US and not each other. So lets use China as an example, and we will use the figures you quoted, where trade (imports /exports) is 30% of China's GDP. How much of that trade is actually trade with the US?
I am a bit pressed for time, so I will use wiki figures, which for 2015. But unless things change dramatically, it will hold.
https://en.wikipedia.org/wiki/List_of_t ... s_of_China

Chinese trade with the US is 557 billion USD out of a total of 3.953 trillion, or around 14% of its total trade. So using your own logic, 14% of 30% (ie the amount of trade specifically with the US that China does) comes out to 4.2% of its GDP. Remember, China isn't putting extra barriers against the EU or Canada, only the US. By your argument, China is even less affected than the US.

BTW, China has traditionally (at least in last few years) to be more dependent on investment than trade, contrary to popular belief. Just saying.

US crisis was self inflicted and then it reverberated throughout the world which simply went on to prove that when US sneezes the rest of the world catches pneumonia. It doesn't really go the other way around precisely because with just 8% of GDP in exports US is highly resistant to outside crises. Which would actually be the biggest objection to Trump's drive for exports: it would make US more susceptible to crises in export markets.

As well as seeing above, your hypothesis seems to run counter with historical precedents when the developed nations actually engaged in trade wars with each other. Note, the raising of tariffs each side are doing, hasn't reached those levels, although if it continues, it may very well do.

All of this makes it clear how laughable the plans for EU/China/Canada to go it alone and isolate the US are. Who is going to be the "United States" of that relationship? Who is going to be the side with a gigantic internal market ($20 trillion economy 70% of which is consumption) willing to run a gigantic trade deficit and soak up the exports? Germany? China? Canada? Fat chance.

I am pretty sure the plan is to target industries where Trump draws support from, and let Trump supporters pressure him into going back to the status quo. As opposed to isolating the US trade. Its not like the EU or China have been subtle about what they will target in retaliation.

But because you suggested it lets say hypothetically , they do isolate the US on trade, and the US is totally cut off from world trade. I certainly don't want this to happen, but lets say it does. For China, without the US trade they directly lose 4.2% of GDP. Ok, not pleasant, but its less than 20% the US experiences. What about the EU?

http://trade.ec.europa.eu/doclib/docs/2 ... 4.2018.pdf
For 2017 US trade with the EU was 632,021 million Euros. Convert that to USD and comes out to 744,844.26 million USD. The EU economy size in USD is... around 16,397,980 million USD in 2016.

https://en.wikipedia.org/wiki/List_of_c ... _(nominal)
Because I am too lazy to add it up individually from the IMF, I am just going to get the 2016 EU size in USD listed on wiki, which would be smaller than in 2017. It makes your numbers look better. But 744,844 million out of an economy of 16,397,980 million USD, comes out to around 4.5%. It hurts, but I think its still less than the US 20% of GDP. So yeah, hypothetically they could, maybe isolate the US on trade. I don't want them to, I want the US to continue to trade and avoid a trade war, but I am not the POTUS.

[mr friendly guy]

Trump's advisor Navaro has pulled back from saying there is a special place in hell for Trudeau.

http://www.abc.net.au/news/2018-06-13/w ... n=business

As well as being an idiot, Navaro is obviously a beta male and got cucked.

[Tribble]

Trump's advisor Navaro has pulled back from saying there is a special place in hell for Trudeau.

http://www.abc.net.au/news/2018-06-13/w ... n=business

As well as being an idiot, Navaro is obviously a beta male and got cucked.

Its not really the comment itself or the controversy it caused so much as the fact that Trump wasn't the one saying it. Navarro took away some of Trumps headlines for the day, which was a big mistake considering his boss demands being the center of attention at every moment.

Only Trump is allowed to insult high profile targets to that degree.

[Kane Starkiller]

I think you misunderstand. Of course the economy is more than imports and exports, however the other components are not necessarily totally independent of each other. What affects imports also affect consumption, and the US is particularly vulnerable in the latter area. This is not just me saying this, various economists argue about this. For example when Obama raised tariffs on Chinese rubber (for tyres), to protect the US domestic industry, it affected consumption elsewhere because people paid more for tyres meaning they had less to spend elsewhere. It was argued it was cheaper to put those tyres workers on welfare equivalent to their pay and continue to import Chinese tyres.

Certain sectors would be more affected yes and there are always unforseen consequences for any economic decision. But all those issues apply to any country in the world. Look at how quickly ZTE imploded. The point remains that on the whole a larger entity with less exposure can withstand the impact better than a smaller entity with more exposure to trade.

However I have a better argument, and believe it or not, you gave me the idea when you talked about other countries isolating the US on trade. After that, I thought, do the numbers allow them to do so.

You see, you might be able to apply the US total trade as a percentage of its GDP and argue it will only be affected so and so, but you're stretching it apply the same to the US trading partners. The reason is, the US is hell bent on putting more barriers against everybody else, but everybody else is only putting barriers against the US and not each other. So lets use China as an example, and we will use the figures you quoted, where trade (imports /exports) is 30% of China's GDP. How much of that trade is actually trade with the US?
I am a bit pressed for time, so I will use wiki figures, which for 2015. But unless things change dramatically, it will hold.
https://en.wikipedia.org/wiki/List_of_t ... s_of_China

Chinese trade with the US is 557 billion USD out of a total of 3.953 trillion, or around 14% of its total trade. So using your own logic, 14% of 30% (ie the amount of trade specifically with the US that China does) comes out to 4.2% of its GDP. Remember, China isn't putting extra barriers against the EU or Canada, only the US. By your argument, China is even less affected than the US.

BTW, China has traditionally (at least in last few years) to be more dependent on investment than trade, contrary to popular belief. Just saying.

Sure in this fanciful scenario where the entire world simultaneously isolates US it would be in the worse position. But this scenario is about as likely as US navy blocading the strait of Malacca. In reality when US was temporarily exempting certain countries from steel and aluminum tariffs they didn't indignantly refuse in solidarity with others. Instead each of them individually begged the US to keep the exmption for them.

As well as seeing above, your hypothesis seems to run counter with historical precedents when the developed nations actually engaged in trade wars with each other. Note, the raising of tariffs each side are doing, hasn't reached those levels, although if it continues, it may very well do.

I simply said 2007 crisis was an internal crisis of the US and not a result of a trade war. Would a trade war result in economic problems for all countries involved? Most likely but still the 2007 crisis really has nothing to do with that.

I am pretty sure the plan is to target industries where Trump draws support from, and let Trump supporters pressure him into going back to the status quo. As opposed to isolating the US trade. Its not like the EU or China have been subtle about what they will target in retaliation.

But because you suggested it lets say hypothetically , they do isolate the US on trade, and the US is totally cut off from world trade. I certainly don't want this to happen, but lets say it does. For China, without the US trade they directly lose 4.2% of GDP. Ok, not pleasant, but its less than 20% the US experiences. What about the EU?

http://trade.ec.europa.eu/doclib/docs/2 ... 4.2018.pdf
For 2017 US trade with the EU was 632,021 million Euros. Convert that to USD and comes out to 744,844.26 million USD. The EU economy size in USD is... around 16,397,980 million USD in 2016.

https://en.wikipedia.org/wiki/List_of_c ... _(nominal)
Because I am too lazy to add it up individually from the IMF, I am just going to get the 2016 EU size in USD listed on wiki, which would be smaller than in 2017. It makes your numbers look better. But 744,844 million out of an economy of 16,397,980 million USD, comes out to around 4.5%. It hurts, but I think its still less than the US 20% of GDP. So yeah, hypothetically they could, maybe isolate the US on trade. I don't want them to, I want the US to continue to trade and avoid a trade war, but I am not the POTUS.

Like I said this is a fanciful fantasy which is about as likely as US navy blockading Rotterdam port. But it also doesn't really address my point which is that there is no market to replace the US. China and Germany are both net exporters so economically their alliance doesn't make sense as a replacement for US market.
Just looking at Canada and Mexico the trade with US is 50% of their GDP. Are they falling on the sword for China? Did Australia reject temporay stay of aluminum tariffs in solidarity with China?

[Kane Starkiller]

EDIT: Actually for Canada it's more like 28% of it's GDP but you get my meaning.

[mr friendly guy]

Certain sectors would be more affected yes and there are always unforseen consequences for any economic decision. But all those issues apply to any country in the world. Look at how quickly ZTE imploded. The point remains that on the whole a larger entity with less exposure can withstand the impact better than a smaller entity with more exposure to trade.

Er ZTE hasn't imploded thanks to Chinese bribes Trump's actions. But hold that thought about less and more exposure to trade because I am going to talk about it next.

Sure in this fanciful scenario where the entire world simultaneously isolates US it would be in the worse position. But this scenario is about as likely as US navy blocading the strait of Malacca. In reality when US was temporarily exempting certain countries from steel and aluminum tariffs they didn't indignantly refuse in solidarity with others. Instead each of them individually begged the US to keep the exmption for them.

Weren't you the one who took the worse case scenario?

You're talking about each country's trade makes a certain percentage of GDP. That entire percentage isn't going to come into play, unless all of their trade is affected. A country can have a giant percentage of GDP due to trade, and one country can put tariffs on them. But if their trade with that protectionist country is only a tiny portion of their total trade, its not going to matter even if they are heavily exposed to trade. The exposure simply doesn't matter because the portion that is affected is still tiny. China and Germany is more heavily exposed to trade than the US, but at the end of the day if the proportion that is affected by US tariffs is still small (relative to the rest of their trading partners), they aren't that badly off. As it stands, the US is interested in putting more barriers / increasing existing barriers against several countries, but those other countries are only doing the same to the US.

If the US put tariffs on countries A, B,C,D,E etc, but those countries are only putting tariffs on the US, how the hell is this not isolating the US? They don't even need an alliance or coordination per se, the US will still end up self isolating. I mean if all the other countries bent over and take it up the arse, then no, the US would be isolated on trade. But that's not happening.

I simply said 2007 crisis was an internal crisis of the US and not a result of a trade war. Would a trade war result in economic problems for all countries involved? Most likely but still the 2007 crisis really has nothing to do with that.

Ok I see where we got on the wrong foot. I am not saying the 2008 crisis is to do with trade, just that a trade war would fuck us back just like the 2008 crisis. Only this time the cause is obviously different. I am also saying historically, trade wars have been bad.

Like I said this is a fanciful fantasy which is about as likely as US navy blockading Rotterdam port. But it also doesn't really address my point which is that there is no market to replace the US. China and Germany are both net exporters so economically their alliance doesn't make sense as a replacement for US market.

I am not saying they will replace the US. I am saying they can take the loss, largely because they still got trade with the rest of the world.

The US on the other hand, would be more affected, because they don't have the rest of the world to fall back on.

Just looking at Canada and Mexico the trade with US is 50% of their GDP. Are they falling on the sword for China? Did Australia reject temporay stay of aluminum tariffs in solidarity with China?

Just making sure I parse your argument correctly. You're saying that because the US is such an important market to these countries, and they cannot afford to replace the US as a market, they will not do the same thing as what China is doing (ie putting up retaliatory tariffs). Or they can't get China to replace the US for their exports, so no solidarity?

If its the latter, just pointing out that Australia is not a good example to use in terms of replacing US trade with China. Because I already got two countries better than the US from a trade perspective. China and Japan, our top two trading partners. Trade with China alone surpasses that of our next three trading partners - Japan, US, and South Korean.
who we traded with in the 2016/17 financial year.

I am also not sure why you think its important they act in solidarity with China, as opposed to acting in their own national interests? Because they are putting tariffs on the US, and I can guarantee you, its not because China is also doing it.

[Kane Starkiller]

Er ZTE hasn't imploded thanks to Chinese bribes Trump's actions. But hold that thought about less and more exposure to trade because I am going to talk about it next.

Well yes it survived because US relented. The point was that each country has certain exposed industries that are vulnerable to disturbances in supply chains. But the overall picture is that US is larger and far less exposed to China.

Weren't you the one who took the worse case scenario?

You're talking about each country's trade makes a certain percentage of GDP. That entire percentage isn't going to come into play, unless all of their trade is affected. A country can have a giant percentage of GDP due to trade, and one country can put tariffs on them. But if their trade with that protectionist country is only a tiny portion of their total trade, its not going to matter even if they are heavily exposed to trade. The exposure simply doesn't matter because the portion that is affected is still tiny. China and Germany is more heavily exposed to trade than the US, but at the end of the day if the proportion that is affected by US tariffs is still small (relative to the rest of their trading partners), they aren't that badly off. As it stands, the US is interested in putting more barriers / increasing existing barriers against several countries, but those other countries are only doing the same to the US.

If the US put tariffs on countries A, B,C,D,E etc, but those countries are only putting tariffs on the US, how the hell is this not isolating the US? They don't even need an alliance or coordination per se, the US will still end up self isolating. I mean if all the other countries bent over and take it up the arse, then no, the US would be isolated on trade. But that's not happening.

I wasn't really talking about hypotheticals merely the fact that every country on the planet is more exposed to US on trade than vice versa. You then jumped onto the pretty much abstract scenario in which all the countries on the planet acting in unison against US which is simply as unlikely as US blockading European ports or something.
The point is that all these countries are interested in their own economies and will therefore deal with US on bilateral terms. Even France and Germany sent their own leaders to indivudually talk to Trump about the tariffs.

Ok I see where we got on the wrong foot. I am not saying the 2008 crisis is to do with trade, just that a trade war would fuck us back just like the 2008 crisis. Only this time the cause is obviously different. I am also saying historically, trade wars have been bad.

I don't think anyone is under the impression that an escalating trade war would be a good thing. It's only that each side is pushing for tariff level they find most beneficial and the question is who will blink first.

Just making sure I parse your argument correctly. You're saying that because the US is such an important market to these countries, and they cannot afford to replace the US as a market, they will not do the same thing as what China is doing (ie putting up retaliatory tariffs). Or they can't get China to replace the US for their exports, so no solidarity?

If its the latter, just pointing out that Australia is not a good example to use in terms of replacing US trade with China. Because I already got two countries better than the US from a trade perspective. China and Japan, our top two trading partners. Trade with China alone surpasses that of our next three trading partners - Japan, US, and South Korean.
who we traded with in the 2016/17 financial year.

I am also not sure why you think its important they act in solidarity with China, as opposed to acting in their own national interests? Because they are putting tariffs on the US, and I can guarantee you, its not because China is also doing it.

Well in case of Mexico and Canada they are more exposed to US than US is exposed to the entire world so there is little chance they would join in some kind of multirateral front against the US. Without those countries US exports are 5.4% of its GDP compared to Chinese exposure to just US of 3%. But escalating tariffs will not just affect the relationship between China and US because if EU is also slapped with US tariffs then EU has surplus production and will almost certainly rise tariffs against China to protect their industries. After all EU and China already have higher tariffs between each other than US has with either of them.
Ultimately the fact is that US is the biggest economy in the world, the most insulated economy in the world and the biggest importer in the world. This gives it a huge amount of leverage over everyone else. But will US still end up blinking first? Who knows.

[mr friendly guy]

I wasn't really talking about hypotheticals merely the fact that every country on the planet is more exposed to US on trade than vice versa. You then jumped onto the pretty much abstract scenario in which all the countries on the planet acting in unison against US which is simply as unlikely as US blockading European ports or something.

The point is that all these countries are interested in their own economies and will therefore deal with US on bilateral terms. Even France and Germany sent their own leaders to indivudually talk to Trump about the tariffs.

Even without that worse scenario, I disagree that the US comes less exposed, because its putting tariffs on several other nations, and for now, those others putting tariffs on each other. For example, the US so far has formally put what, $15 billion tariffs on China who has retaliated with the same amount. So that combine $30 billion of trade is obviously a smaller percentage of the US economy than it is of the Chinese economy, as the US is 40% bigger. However the US also puts tariffs on Canada, who has hit back with $16.6 billion worth of tariffs (lets round it down to $15 billion to make it easy to do the maths, and presumably its equal to what the US has done to Canada). So the US now finds $60 billion dollars of trade affected, while China is still at $30 billion. Those $60 billion is a small percentage of the US economy, but its a bigger one than the $30 billion on the Chinese one. So it doesn't really need the whole world individual putting tariffs against the US to show that the US is already worse off, at least compared to bigger economies like China and the EU. Obviously Canada with one tenth the US economy still comes out worse off.Not that its stopped them putting tariffs on.

As you can see, it doesn't take much before it adds up such that the US actually loses more than those other countries (at least the bigger ones like EU and China). If the US was only putting tariffs on one country, then its less exposed, but when its putting it on multiple countries at the same time, the story is different.

Well in case of Mexico and Canada they are more exposed to US than US is exposed to the entire world so there is little chance they would join in some kind of multirateral front against the US. Without those countries US exports are 5.4% of its GDP compared to Chinese exposure to just US of 3%. But escalating tariffs will not just affect the relationship between China and US because if EU is also slapped with US tariffs then EU has surplus production and will almost certainly rise tariffs against China to protect their industries. After all EU and China already have higher tariffs between each other than US has with either of them.
Ultimately the fact is that US is the biggest economy in the world, the most insulated economy in the world and the biggest importer in the world. This gives it a huge amount of leverage over everyone else. But will US still end up blinking first? Who knows.

Firstly, I think North Korea is more insulated than the US. But if you mean most insulated among the major economies, fair enough. However what the others lack in insulation, they more than make up for in diversification as I have shown previously.

Secondly, if you're suggesting the EU / China increase tariffs against each other as well as the US, aren't you suggesting a scenario more improbable than the one where you described as likely as "the US blockading Rottendam". By Occam's razor its definitely yes. It will as likely as Stannis coming back as a lich and ruling Westeros. GoT jokes aside, I have more than just Occam's to point out this is unlikely. I have evidence to the contrary, with China announcing it will decrease tariffs. Its biggest trading partner the EU may not reciprocate, but I suspect it will be less tempted to raise tariffs against China because it will lose out the benefits from Chinese lowering tariffs when China inevitably retaliates.

[K. A. Pital]

But the overall picture is that US is larger and far less exposed to China.

Oh we will Xi...

I wasn't really talking about hypotheticals merely the fact that every country on the planet is more exposed to US on trade than vice versa. You then jumped onto the pretty much abstract scenario in which all the countries on the planet acting in unison against US which is simply as unlikely as US blockading European ports or something. The point is that all these countries are interested in their own economies and will therefore deal with US on bilateral terms. Even France and Germany sent their own leaders to indivudually talk to Trump about the tariffs.

Yes, they sent - they were snubbed and told off, and Trump implemented tariffs against Europe, and now against China - who also went to him with one-on-one negotiations. So now both Europe and China will consider retaliatory measures. More importantly, they will also consider import substitution for critically exposed industries. No secret that most Chinese hardware producers after the recent spat started feverishly looking to fully home-sourced processors, for example...

I don't think anyone is under the impression that an escalating trade war would be a good thing.

Yes, it is a good thing. Wreck the fucking world order and get wrecked, US.

Ultimately the fact is that US is the biggest economy in the world, the most insulated economy in the world and the biggest importer in the world. This gives it a huge amount of leverage over everyone else. But will US still end up blinking first? Who knows.

How is the US insulated? It's industries consume a huge amount of precursors which are produced all over the world, from Africa to China. Supply chains are not localized. It's not the 1970s.

[Kane Starkiller]

Even without that worse scenario, I disagree that the US comes less exposed, because its putting tariffs on several other nations, and for now, those others putting tariffs on each other. For example, the US so far has formally put what, $15 billion tariffs on China who has retaliated with the same amount. So that combine $30 billion of trade is obviously a smaller percentage of the US economy than it is of the Chinese economy, as the US is 40% bigger. However the US also puts tariffs on Canada, who has hit back with $16.6 billion worth of tariffs (lets round it down to $15 billion to make it easy to do the maths, and presumably its equal to what the US has done to Canada). So the US now finds $60 billion dollars of trade affected, while China is still at $30 billion. Those $60 billion is a small percentage of the US economy, but its a bigger one than the $30 billion on the Chinese one. So it doesn't really need the whole world individual putting tariffs against the US to show that the US is already worse off, at least compared to bigger economies like China and the EU. Obviously Canada with one tenth the US economy still comes out worse off.Not that its stopped them putting tariffs on.

As you can see, it doesn't take much before it adds up such that the US actually loses more than those other countries (at least the bigger ones like EU and China). If the US was only putting tariffs on one country, then its less exposed, but when its putting it on multiple countries at the same time, the story is different.

It's not that $30 billion of trade is now gone it's that the items currently under increased tariffs encompass $30 billion of trade. I don't know how these tariffs actually affected China and US and whether the effects are symmetrical. In any case at this point it's a fraction of $30 billion not actually $30 billion and it's not significant for US or China as a whole.
However US is not escalating the exact same tariffs for every single country in the world. Just yesterday Trump approved tariffs on $50 billion dollars of Chinese goods. In other words US is in a position to first increase pressure on one country and then move on to another. So unless US decides to simultaneously increase tariffs at the same rate against every country in the world your scenario simply won't happen.

Firstly, I think North Korea is more insulated than the US. But if you mean most insulated among the major economies, fair enough. However what the others lack in insulation, they more than make up for in diversification as I have shown previously.

Secondly, if you're suggesting the EU / China increase tariffs against each other as well as the US, aren't you suggesting a scenario more improbable than the one where you described as likely as "the US blockading Rottendam". By Occam's razor its definitely yes. It will as likely as Stannis coming back as a lich and ruling Westeros. GoT jokes aside, I have more than just Occam's to point out this is unlikely. I have evidence to the contrary, with China announcing it will decrease tariffs. Its biggest trading partner the EU may not reciprocate, but I suspect it will be less tempted to raise tariffs against China because it will lose out the benefits from Chinese lowering tariffs when China inevitably retaliates.

Actually imports/exports are about 23% of North Korean economy and specifically exports are 10% of it's GDP which is actually more than 8% for US. So much for Juche .
But yes I referred to major economies of the world I didn't actually check the data for every single country. Like I said above US is not engaging with every country with the same intensity nor would it make any sense for US to do this.
I do think that if EU looses US as an export market EU will have a surplus production and will certainly not be in the mood to accept the surplus goods that China will also have. In any case this scenario depends on US simultaneously escalating tariffs against both EU and China at the same intensity.

Oh we will Xi...

Well if and when China becomes larger than US and less exposed to US than vice versa we will reevaluate the situation. Until then Xi can pass the time watching 1980s documentaries about the inevitable rise of Japan as the largest economy in the world...

Yes, they sent - they were snubbed and told off, and Trump implemented tariffs against Europe, and now against China - who also went to him with one-on-one negotiations. So now both Europe and China will consider retaliatory measures. More importantly, they will also consider import substitution for critically exposed industries. No secret that most Chinese hardware producers after the recent spat started feverishly looking to fully home-sourced processors, for example...

But the tariffs are not being implemented at the same rate. China was just hit by additional tariffs yesterday. As I said to mr friendly guy US can pick and choose its battles. And if it's so easy to replace your supply chains as you suggest ZTE can do then so can any country and so can US right?

Yes, it is a good thing. Wreck the fucking world order and get wrecked, US.

Ever since the end of US civil war in 1865 US left each decade with a larger economy than it was when it entered it even in the decade of the Great Depression. I think US will be fine. It's a trade spat. You know, percentage here percentage there.

How is the US insulated? It's industries consume a huge amount of precursors which are produced all over the world, from Africa to China. Supply chains are not localized. It's not the 1970s.

I said more insulated not insulated without qualifiers.

[K. A. Pital]

How is the US insulated? It's industries consume a huge amount of precursors which are produced all over the world, from Africa to China. Supply chains are not localized. It's not the 1970s.

I said more insulated not insulated without qualifiers.

Ok, but is that really so? How exactly is the US more insulated than others?