Tornado Alley (PROG)

[fuagf]

Trump continues to misrepresent the China trade deficit.

"Why the Trump Administration is Confused about Trade Deficits and Economic Growth"
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"“We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented
the U.S.,” he wrote. “Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion."
https://www.politico.com/story/2018/04/04/china-tariffs-us-imports-trump-500163
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In more ways than one.

Trump Hates the Trade Deficit. Most Economists Don’t.
By JIM TANKERSLEY MARCH 5, 2018

[...]

“We lost, over the last number of years, $800 billion a year,” he said in the White House on Monday, while defending his tariffs against criticism from Republican leaders in Congress. “Not a half a million dollars, not 12 cents. We lost $800 billion a year on trade.” He went on to say that the country “lost $500 billion” a year to China, though it was not clear what figure he was citing, given that America’s annual trade deficit with China has never climbed beyond $375 billion.

[...]

Most economists do not see the trade gap as money “lost” to other countries, nor do they worry about trade deficits to a large degree. That’s because trade imbalances are affected by a host of macroeconomic factors, including the relative growth rates of countries, the value of their currencies, and their saving and investment rates. For instance, America’s trade deficit narrowed dramatically during the Great Recession, when national consumption faltered.
https://www.nytimes.com/2018/03/05/us/politics/trade-deficit-tariffs-economists-trump.html

Misrepresentation continues to be a top Trump trait. Misunderstanding remains another.

Springtime for Sycophants
[...]
In Navarro’s version of the world, for example as expressed in a campaign white paper .. https://assets.donaldjtrump.com/Trump_Economic_Plan.pdf , VATs give European companies a huge, unfair trade advantage. U.S. products sold in Europe have to pay VAT — for example, they must pay a 19 percent tax .. https://ec.europa.eu/taxation_customs/sites/taxation/files/resources/documents/taxation/vat/how_vat_works/rates/vat_rates_en.pdf .. if sold in Germany. This, says the white paper, is just like an import tariff. Meanwhile, German producers pay no VAT on goods they sell in America; this, the paper says, is just like an export subsidy. I’m pretty sure that’s what Trump means when he talks about “horrific” tariffs.

But what this story misses is the fact that when German producers sell to German consumers, they also pay that 19 percent tax. And when U.S. producers sell to U.S. consumers, they, like German producers, don’t face any VAT. So the tax doesn’t tilt the playing field at all, in either market. In reality, a VAT has nothing to do with competitive advantage; it’s basically a sales tax — a tax on German consumers — which is why VATs are considered legal by the World Trade Organization.

So how does someone who misunderstands such a basic, well-understood point about taxes and trade get to be a key economic adviser? As I said, it’s because he tells the boss what he wants to hear. More than that, he’s willing to abase himself in extraordinary ways.
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