1/12
After several years as the US’s top trading partner, according to this article by Ken Roberts, China may finish this year third, behind Mexico and Canada.
@forbes forbes.com/sites/kenrober…
After several years as the US’s top trading partner, according to this article by Ken Roberts, China may finish this year third, behind Mexico and Canada.
@forbes forbes.com/sites/kenrober…
2/12
“The U.S. trade deficit with China,” Roberts adds, “is like to be the lowest total since 2014, excluding 2020. While it will still be three times the size of the deficit with Mexico, it was about five times greater in 2018.”
“The U.S. trade deficit with China,” Roberts adds, “is like to be the lowest total since 2014, excluding 2020. While it will still be three times the size of the deficit with Mexico, it was about five times greater in 2018.”
3/12
Is this evidence that the US and China are decoupling economically, and that the Trump administration tariffs have somehow “worked” to reverse the trade imbalances of both countries?
Is this evidence that the US and China are decoupling economically, and that the Trump administration tariffs have somehow “worked” to reverse the trade imbalances of both countries?
4/12
In a much older world of high frictional trading costs and in which international capital flows consisted mainly of FDI and trade finance, it might have been, but not in the global trade and capital regime in which we live.
In a much older world of high frictional trading costs and in which international capital flows consisted mainly of FDI and trade finance, it might have been, but not in the global trade and capital regime in which we live.
5/12
The U.S. trade deficit will top $1 trillion for the first time in 2021, according to Rogers, and this “calls into question whether tariffs are effective.”
The U.S. trade deficit will top $1 trillion for the first time in 2021, according to Rogers, and this “calls into question whether tariffs are effective.”
6/12
It certainly does. The point is that not only are US deficits running at record levels, so are Chinese surpluses, and the US continues to absorb a pretty steady 40-50% share of global trade surpluses.
It certainly does. The point is that not only are US deficits running at record levels, so are Chinese surpluses, and the US continues to absorb a pretty steady 40-50% share of global trade surpluses.
7/12
Even as Chinese surpluses with the US decline, in other words, as long as China’s deficient domestic demand results in soaring trade surpluses, for which they demand payment, directly or indirectly, in US assets, they must also result in soaring US deficits.
Even as Chinese surpluses with the US decline, in other words, as long as China’s deficient domestic demand results in soaring trade surpluses, for which they demand payment, directly or indirectly, in US assets, they must also result in soaring US deficits.
8/12
While this might still sound improbable to those whose mental image of trade continues to be that of clipper ships financed by intrepid merchant bankers signing letters of trade credit in exotic port cities, it is in fact just basic B-o-P accounting.
While this might still sound improbable to those whose mental image of trade continues to be that of clipper ships financed by intrepid merchant bankers signing letters of trade credit in exotic port cities, it is in fact just basic B-o-P accounting.
9/12
In today’s world of negligible transportation, communications and financial costs, countries that try to boost growth by suppressing domestic demand must run trade surpluses against which they must acquire foreign assets.
In today’s world of negligible transportation, communications and financial costs, countries that try to boost growth by suppressing domestic demand must run trade surpluses against which they must acquire foreign assets.
10/12
As long as the US (along with the UK, Australia and Canada) provides deep, liquid, and flexible asset markets safe from the risk of confiscation and punitive taxation, it must supply the assets to foreigners and run the corresponding deficits.
As long as the US (along with the UK, Australia and Canada) provides deep, liquid, and flexible asset markets safe from the risk of confiscation and punitive taxation, it must supply the assets to foreigners and run the corresponding deficits.
11/12
US-China trade imbalances are contracting sharply, while overall Chinese surpluses and US deficits are nonetheless growing, almost in lockstep. This should be enough to undermine the idea that tariffs – especially tariffs on a single country...
US-China trade imbalances are contracting sharply, while overall Chinese surpluses and US deficits are nonetheless growing, almost in lockstep. This should be enough to undermine the idea that tariffs – especially tariffs on a single country...
12/12
or group of countries – will do much to redress global trade imbalances, let alone put pressure on countries to resolve their persistent deficient domestic demand. We clearly need to rethink our trade policies.
or group of countries – will do much to redress global trade imbalances, let alone put pressure on countries to resolve their persistent deficient domestic demand. We clearly need to rethink our trade policies.
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