The above graph shows the good news. Our overall trade deficit, with other countries around the world has been going down in the three years of the Biden administration.

In fact, our trade deficit with China has also been going down. Everyday, if we tune into news, we hear bad news and it makes people nervous. The cost of manufacturing in many countries is less expensive. So, it is very much in the spirit of providing products at lower costs, that companies will outsource production.

Companies usually boast of how much of their goods are sold abroad. As I travel, it may seem odd, but the US presence can be seen in many countries. People want to stay in Marriott Hotels, be it in China or Saudi Arabia.

The US has a large trade deficit with China. In 2023, this deficit was 367 billion dollars. We have had a trade deficit with China for four decades. Much of what Trump says about the trade deficit with China is highly exaggerated. This is explained well in the link from Factcheck.org ,

Trump’s Latest False Claim About the U.S.-China Trade Deficit

From Factcheck, “The total U.S. trade deficit with China in goods and services in 2023 was about $252 billion, the lowest it has been in 14 years. Former President Donald Trump was way off when he falsely claimed that the U.S.-China trade gap is about four times as high.”

There are 3 great fallacy of Trump’s tariff plans. First is that we live in a global economy, and when fewer products are imported from China, then more are imported from other countries. During Trump’s time in office, our trade deficit increased.

Second, is that the importers will pass on the cost of tariffs in the form of higher prices to consumers in the US. So, the billions of dollars the government is receiving is absorbed by US consumers, so it makes products in the US more expensive.

The third fallacy, and it has been proven many times, is that imposing tariffs on China goods, will result in tariffs on exported US goods, so it is a lose-lose situation.

Per the link with Brookings Institute, “The ensuing trade war cost the U.S. economy nearly 300,000 jobs. The tariffs served as a regressive tax on imported goods that were primarily borne by American consumers.”

Brookings Link: How will Biden and Trump tackle trade with China?

The bottom line is trade wars, cost jobs, and act as a tax on consumers. Trump always exaggerates the problem and extremely simplify the solution. He is simply playing to his base and using animosity towards China to promote trade wars. I fear it will end badly, and you know it will be blamed somehow on Democrats.

Harris will take a more global approach to trade, and it is my expectation, is that tariffs will be reduced through negotiations with China. Additional tax incentives to US manufacturers will improve the trade imbalance.

By electing Kamala Harris, at a minimum, we get a president who will listen to economists, instead of Trump’s clashes with them. You will have a president that works with other world leaders, because fair trade is really an international issue.

Stay tuned,

Dave