Trump says he wants free trade. He also wants no trade deficits with countries. He also does not want companies moving to other countries just to get cheaper labor. He has also said he wants to lower the minimum wage $2 per hour.

What I take out of this is, if we have a $100 billion trade deficit with Mexico, he will tax imports such that the deficit is near zero. What are the implications of this?

In many ways it makes sense. China is now buying up about 100 companies a year. We buy their products, they buy up our hotel properties or bonds. Normally when trade occurs you would think it would balance out. They sell us trinkets, we sell them cars, no dollar or RMB going either way.

American labor must unfairly compete with minimum wage and other laws on labor. Yes, there is no basis for these laws. Chinese citizens are forced to work for less than they could.

You can also say the dollar is a unit of trade like a pseudo car. Thus if they hold the dollar and they don't trade, they lose 5% a year due to inflation. Seems there should be law preventing people buying real estate in other countries. If you want to help a company out you would own non-secure bonds.

There are no blockades, people can trade, it just has to balance out in real goods.

You should look int nash equilibrium in tariff wars. Yes, the optimal way to respond to a free rider problem is to fight back with increasing tariff but at the same time, it is a lose lose proposition for everyone. That's a prisoner dilemma. The increase in price in both countries is so much that the overall volume and production goes down.

Now Trump is right that the US being the biggest economy in the world has more power when it comes to negotiate trade deals. Them increasing the price makes demand for a good lower hence the price decreases and we go back to the original price. Something that a small country can't do.

Truth is, you can't artificially maintain low value added jobs in a globalized economy setting. It's politically suicide to say because blue collar workers america #1 but the country as a whole is better off delegating that work to third world countries and specializing in what it does best (Ricardo & Heckscher–Ohlin comparatif advantages).

The only problem is that you have a full generation of people with no hope of finding a job because they are too old to learn new skills.

I read some of the articles but it does not seem to jive with common sense. If China has a $500 billion trade surplus, that money can be used to buy U.S. real estate or build a military. Our poor are denied jobs due to minimum wages and taxes. Rather than the $500 billion going to Chinese government it would go to our government and they could lower taxes. All China has to do is start buying our goods, or allow its citizens to keep their money. Food stamp program could be doubled. Why not just sell California to China, then the rest west of the Mississippi? When I buy stuff from China on ebay, I don't even think I pay sales taxes.

One thing that's not considered in these discussions is that the foreign politicians love the high tariffs on their imports because it gives them a WIN-WIN. It's an easy sell to their citizens AND it opens up a an avenue for smuggling. That's why I wouldn't expect the Chinese to budge on this. I think in the end, our government just says 'f- it, we're still better off buying their cheap stuff, let them have their high tariffs.'

Our minimum wage laws and unions prevent labor from being paid $5.00 per hour. Thus they move the factories to Mexico, to escape the laws of the United States. Then they send the stuff in and claim Milton Friedman, Ayn Rand free trade?

Their should either be a tariff, or we should lower minimum wages and other laws that prevent our workers the right to a living.

What do you mean by a "free rider problem" in the context of trade?

Do you mean countries pegging their currencies to the dollar at artificially low rates, or something else?

When a country has tariffs on imports at their border and the other does not. Free rider because the first country has all the advantages of free trade without the inconvenients.