There was an item on the op-ed page of the Wall Street Journal recently by Alan Blinder titled A Brief Introduction to Trade Economics. Alternate link.
There he describes trade surpluses and deficits using the homespun analogy that's been around a while and sounds very reasonable. An individual gives a store money for groceries, and a personal trade deficit results. But that's not a bad thing. I first heard the analogy in an interview with Rand Paul, but who knows where it originated.
But then he gets to the the principle of comparative advantage, i.e., each country does best when it produces and sells the things that country is better at than other countries. So far so good. Read his article to see his explanation of it.
But the things the U.S. produces best are technology and military weaponry. The weaponry is a special area and any trade deserves special scrutiny. As to technology, once it gets in the hands of a foreign entity such as China, they've got it, and there's no getting it back. And there's always the potential for wars, and any country expecting to defend itself shouldn't give up raw materials it might need.
But economists are focused on tariffs. Ideally, each country could trade with another with no tariffs. But currently, it's very one sided. It appears Trump would go along with eliminating tariffs if our trading partners did too. And if that doesn't happen, Trump wants to retaliate with tariffs on imported products and wait for the other side to blink. That may or may not happen. But it might be at least worth a try.
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10:15 AM 7/18/2018
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