The important part is that this doesn’t seek to force a zero trade deficit on a per-country basis. Imagine insisting Cambodia has to buy as much US goods (taking into account the type of goods the US exports) as US companies import from Cambodian factories.
Buffett's suggestion, while elegant, would require that Congress passes legislation on this, which there's zero percent chance that it would, in its present state.
The current state of the government is that Congress has tacitly ceded their power to the President. They are allowing him to do things that generally would not be permitted with out Congressional approval, because the majority is aligned with him anyway.
An intelligent or competent leader who had the power currently enjoyed by the President would be able to implement the system suggested by Buffet, and it would likely see less opposition than the current tariffs have.
An intelligent or competent leader probably wouldn’t be in power in a situation like this. This is a situation that arises when the partisans have chosen blind allegiance to a cult of personality over the kind of messy politics you get when you have to try to win the allegiance of a party by proposing policy that a majority can get behind.
Actually, no. They haven't "ceded" a damn thing. If they did, the GOP would be working on Trump's legislative agenda, which is something it's been sabotaging again and again in spite of having a slim majority in both the House and the Senate. The plan seems to be: sabotage until midterms, then lose one or both majorities to dems, and raise money off "gracefully losing" for the remaining 2 years of Trump's term. That was the plan 8 years ago, too. It worked.
I fear that Congress will be unable to pass anything that isn't a budget resolution for the foreseeable future.
The filibuster rule requires bipartisan agreement to implement any proposed policy, and neither party wants to give an administration from the other party any kind of win.
Perversely, the better the idea, the less likely it is to pass Congress.
Better idea -> it will be successful -> it will be popular -> the administration will benefit politically -> the other party will oppose it -> it won't get 60 votes in the Senate -> it won't become law
Over 90% of the trade deficit is attributable to China, the EU, Mexico, Vietnam, Taiwan, Japan, South Korea, and Canada. These are big, diversified economies. Nobody is focused on Cambodia.
Yes, that is stupid. Why not apply that to the big economies that the GP comment said was 90% of the deficit. Exempt small low income countries - save a lot of people a lot of paid at little cost.
On the other hand this is a bargaining tactic. I do not think these tariffs will last.
> Instead, recall that President Trump views tariffs as generating negotiating leverage for making deals. It is easier to imagine that after a series of punitive tariffs, trading partners like Europe and China become more receptive to
some manner of currency accord in exchange for a reduction of tariffs
My grasp of economics is tenuous at best, but wouldn't that just encourage small, low-income countries to become middlemen who import from the US due to the low tariff and immediately export to any country looking to reduce their local US tariff rate? And then after a short while I'd imagine the US would probably either slap a 90% tariff or just ban exports entirely to that middleman country?
He seems quite confident that we "hold all of the cards", to quote another set of international trade negotiators.
I am less confident. The domestic consequences are immediate. Many of these negotiations are with experienced and patient experts. China, in particular, is under no obligation to its people or stock market to resolve this quickly.
The tariffs may not last, but I think they will end more unilaterally than Miran does. I guess we'll reach the Finding Out stage soon enough.
I think the longer the US waits the relatively weaker it becomes, so the sooner the better from that point of view.
I think many people in the US, and almost everyone in Europe, has not really woken up to the extent to which their economic clout has diminished over the last few years.
People go into denial about this, as it undermines their worldview, but if you look at west vs rest GDP the change over the last few decades is huge.
Pressure to move back to China where their tariff drops from 49% to 34%?
Over the past few years a lot of companies have moved production out of China and into friendlier countries like Vietnam, anticipating US pressure on China. Vietnam's tariff rate is 42%. Now they wish they'd left their production lines in China.
> Yes, that is stupid. Why not apply that to the big economies that the GP comment said was 90% of the deficit. Exempt small low income countries - save a lot of people a lot of paid at little cost.
I suspect Trump is focused on a simple and aggressive message aimed at our largest trading partners, and doesn’t want to dilute it by making exceptions out of the gate.
What do you mean by “nobody”? The U.S. government has done exactly this to Cambodia. It is stupid, for exactly the reason you say, but it’s also relevant, because it has happened.
I have a 100% trade deficit with the grocery store and a 100% trade surplus with my employer. Expecting all parties to trade at parity is utterly insane.
