Deficits and Tariffs for Dummies
Trump has taken the trade deficit that is very beneficial to USA residents, and hit USA residents and foreign residents over their heads with it, in an effort to break it.
USA yearly trade deficit is about 3% (three percent) of GDP in the last 30 years. Three per cent per year, memorize this, please. USA trade deficit is about 3% (three percent).
1. Deficit, where it means something
1. Deficit, where it means something
Economic deficit in my country means something much more serious than in USA. We have a currency called Denar (named upon the Ancient Roman "Denarius"). Our economy has about 15% yearly trade deficit per GDP in the last 30 years. Yes, fifteen percent of GDP per year.
Let's take all the imports in the last 10 years as 100%. My country has had about 80% of that amout as exports; this means there's a negative 20% difference between the imported values and the exported values.
This country is still OK. We have large amounts of foreign currencies entering from expatriates that cover the discrepancy. We actually have one of the most stable currency in the world, who'se value has been pegged at about 61,5 denars/euro in the last 25 years, with slight moves up and down.
Let's take all the imports in the last 10 years as 100%. My country has had about 80% of that amout as exports; this means there's a negative 20% difference between the imported values and the exported values.
This country is still OK. We have large amounts of foreign currencies entering from expatriates that cover the discrepancy. We actually have one of the most stable currency in the world, who'se value has been pegged at about 61,5 denars/euro in the last 25 years, with slight moves up and down.
If, for some reason, expatriates decrease the money sent here by 50% (like a USA-rest-of-NATO breakdown and USA vs. rest of NATO vs Russia war) for a few years, euros and dollars will become more expensive for the country's inhabitance that uses denars (double, or more), so imported goods will become harder to buy because of their higher prices.
2. USA ripping foreigners off
2. USA ripping foreigners off
In the last 10 years, USA has about 80% discrepancy of import and export, too. USA exports about 80% of the value it imports. But, the crucial difference is that USA has an unlimited supply of the currency, doesn't need expatriates to send dollars to USA, so USA residents can be able to buy foreign goods and services.
Essentially, that -20% imports-imports discrepancy are dollars, currency. USA has an unlimited amount of them. So, USA consumers are basically "ripping off" the rest of the world by sending them money, and getting real goods and services for nothing but that money. Of course, this means that the easy life will decrease the need for some USA residents to do work to produce things, since they can be gotten cheaply from abroad. I guess they will have to get new, better jobs ("tough" for USA-ns, right? -- this is sarcasm)?
Essentially, that -20% imports-imports discrepancy are dollars, currency. USA has an unlimited amount of them. So, USA consumers are basically "ripping off" the rest of the world by sending them money, and getting real goods and services for nothing but that money. Of course, this means that the easy life will decrease the need for some USA residents to do work to produce things, since they can be gotten cheaply from abroad. I guess they will have to get new, better jobs ("tough" for USA-ns, right? -- this is sarcasm)?
3. Trump's Tariffs
3. Trump's Tariffs
What Trump's tariffs are doing is:
- - Making foreign goods and services more expensive for USA-ns;
- - Creating international hatred country-against-country;
- - Decreasing even good trade that benefits both countries' inhabitances.
Basically, Trump has taken the trade deficit that is very beneficial to USA residents, and hit USA residents and foreign residents over their heads with it, in an effort to break it.
