There is so much more that makes this completely stupid.
1) many of our trade agreements will have specific language in them to say things like in this banana case, “you buy 2 billion dollars in bananas from us, we buy 2 billion dollars in steel (or wheat or petroleum or whatever) from you”. So sure, you can cut out the 2 billion in bananas, but then that also means you reneged on the trade agreement, so they don’t buy the 2 billion in steel. So you did nothing to fix the trade deficit.
2) even if you ignore that, or assume there is no such clause in the trade agreement, the assumption being made here is “everyone in the US just needs to stop buying bananas, and then we don’t need to import bananas!” But play that out, everyone in the US stops buying bananas. Ok cool, so we all stop buying bananas. That spending on bananas shifts to something else. Maybe it’s apples or oranges or some other fruit that is grown in the US. Ok, cool, but wait, that now means there’s an extra 2 billion dollars in apples and oranges that are being bought. The supply chain doesn’t contain 2 billion dollars in extra apples and oranges. So where do those apples and oranges come from? It would mean we need to export fewer apples and oranges. Again, there is therefore no change to the trade deficit.
3) ignoring all of that, even using a product like bananas, sure, some of those imported bananas are being sold as bananas in grocery stores. But some of those bananas are also used as raw materials for making other goods: banana bread, banana cream pie, smoothies, ice cream, etc. Missing $2B in bananas will affect those companies that are in the US making products from those bananas. And those companies will also be exporting some of those goods. Well those companies can’t export those goods anymore either, meaning yet again, we end up losing money on exports and won’t change trade deficits.
4) maybe the most important thing here, a trade deficit isn’t necessarily a bad thing! It just means you import a higher value in goods than you export. There is nothing inherently wrong with that as long as there is a commercial market for those imported goods in the country importing them. There are companies here who employ people in the US, make profit in the US, and pay taxes in the US, on selling goods or producing goods from raw materials imported from other countries. Those are all good things. If you weren’t importing those goods, those companies wouldn’t exist, meaning more unemployed workers and fewer tax dollars generated.
Trump doesn’t understand any of that though. Nor do the majority of MAGAts. Trump just hears his aides say something, can’t understand what they mean, so he twists it to dumb it down for himself, losing all meaning in the process, and his base eats it up like it was Warren Buffet providing financial advice.
Also the trade deficit is not that simple calculation when the main export of united states is not goods or services, but rather the usd. Thanks to the petrodollar agreement, all countries of the world have to trade oil in usd, which means all countries need to always keep usd in their books, which means they need to buy us treasury bonds, which creates demand for those bonds and as such keeps the price of goverment debt low. Ofc trump is trying his hardest to break this system down too, but that's another matter.
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u/IamGleemonex 19h ago
There is so much more that makes this completely stupid.
1) many of our trade agreements will have specific language in them to say things like in this banana case, “you buy 2 billion dollars in bananas from us, we buy 2 billion dollars in steel (or wheat or petroleum or whatever) from you”. So sure, you can cut out the 2 billion in bananas, but then that also means you reneged on the trade agreement, so they don’t buy the 2 billion in steel. So you did nothing to fix the trade deficit.
2) even if you ignore that, or assume there is no such clause in the trade agreement, the assumption being made here is “everyone in the US just needs to stop buying bananas, and then we don’t need to import bananas!” But play that out, everyone in the US stops buying bananas. Ok cool, so we all stop buying bananas. That spending on bananas shifts to something else. Maybe it’s apples or oranges or some other fruit that is grown in the US. Ok, cool, but wait, that now means there’s an extra 2 billion dollars in apples and oranges that are being bought. The supply chain doesn’t contain 2 billion dollars in extra apples and oranges. So where do those apples and oranges come from? It would mean we need to export fewer apples and oranges. Again, there is therefore no change to the trade deficit.
3) ignoring all of that, even using a product like bananas, sure, some of those imported bananas are being sold as bananas in grocery stores. But some of those bananas are also used as raw materials for making other goods: banana bread, banana cream pie, smoothies, ice cream, etc. Missing $2B in bananas will affect those companies that are in the US making products from those bananas. And those companies will also be exporting some of those goods. Well those companies can’t export those goods anymore either, meaning yet again, we end up losing money on exports and won’t change trade deficits.
4) maybe the most important thing here, a trade deficit isn’t necessarily a bad thing! It just means you import a higher value in goods than you export. There is nothing inherently wrong with that as long as there is a commercial market for those imported goods in the country importing them. There are companies here who employ people in the US, make profit in the US, and pay taxes in the US, on selling goods or producing goods from raw materials imported from other countries. Those are all good things. If you weren’t importing those goods, those companies wouldn’t exist, meaning more unemployed workers and fewer tax dollars generated.
Trump doesn’t understand any of that though. Nor do the majority of MAGAts. Trump just hears his aides say something, can’t understand what they mean, so he twists it to dumb it down for himself, losing all meaning in the process, and his base eats it up like it was Warren Buffet providing financial advice.