^^ Adjust Chinese exports for value added in China and your figures change dramatically.
Then you won't be able to use your silly real estate examples.

That's already been done. The estimate by experts is that it overstates by about 30%, leaving around $270 billion in deficit/year. My "silly" numbers already include your objection, but don't include the lost long term value of IP and factories going overseas, which is lost wealth but not measurable on import/export numbers.

The amount of hard measurable wealth flowing out is truly staggering, and that's not counting playing into China's long term plan of greatly weakening the US economy as they become self sufficient.

Who is this "we"? I buy stuff cheaper from overseas and pay cash I'm better off and not in debt. Millions like me do the same. The US runs BUDGET deficit to pay for Social programs & Wars I don't support and sells bonds to finance. These are two things being combined in to one for political reasons. My Government spending irresponsibly is not caused by consumers, like me, looking for good deals.

Losing US jobs is bad, but so is limiting consumer choices. The consumer should not be the one paying to "save" jobs. Capitalism is about creative destruction; jobs and businesses are replaced daily by cheaper methods or competing products with better features.

The US spends a lot of money on entitlement programs which may be related to loss of jobs. Increases in taxes and debt to pay for entitlement programs may offset your marginal savings on stuff you buy overseas.

Like many other questions of our day, this is very complicated and the answer is both yes and no:

Is Trump accurate? No.
Is America being fleeced? Sort of.

Here are the trade deficit numbers by top trading partners:

China - $636 billion traded with a $375 billion deficit.
Canada - $582 billion traded with an $18 billion deficit.
Mexico - $557 billion traded with a $71 billion deficit.
Japan - $204 billion traded with a $69 billion deficit.
Germany - $171 billion traded with a $65 billion deficit.

For a self sustainable and massive powerhouse like America there is really not much of a downside to a small trade deficit. In fact, we have export regulations that prevent us from selling military, satellite, tech or other technologies or goods that could reduce or flip the trade deficit. We also have the largest(most affluent) free consumer market in the World, so most companies target the US as a destination for consumer goods.

But a large trade deficit is likely not good. When you talk about fair trade deals it involves a lot of factors, like good faith efforts to enforce your laws and values. What you trade is also important, are you importing machines or raw materials and using them to produce goods that generate a lot of value for your country, or are you buying rubber ducks that you offer as carnival prizes?

If you look at these factors, America is being fleeced specifically by China for some of the reasons that ToothSayer mentioned but mostly because:

1) China has a massive labor force that it mercilessly exploits, and has exploited without repercussion for decades, to produce low cost goods
2) China has acquired (stolen or otherwise) and cultivated strong manufacturing capabilities for many different types of goods
3) American companies have the freedom to operate how they choose
#4-x) Businesses that choose to work with Chinese companies or operate in China take huge risks with IP and the Chinese govt. doesn't enforce laws and often encourages and assists in IP theft or other highly unethical practices. However, large companies typically model these risks vs potential benefits and choose to enter a market with a full understanding of risks.

It is also very notable - as ToothSayer alluded - that China is not an ally of the USA but is a rival and China is an outright enemy to US allies such as Japan.

This is notable because China has an agenda and a tight grip on all of it's people. In the USA, a farmer can produce whatever he wants and a company can sell to whoever it wants, but in China the govt has a stake and control in everything. This means that in order for the US to tighten the trade gap it will need to sign a trade agreement with China that they actually adhere to(impossible), use regulations on US companies to increase production of in demand goods or stop trading with China.

But Trump is implying that America is universally being fleeced by China, Canada, Mexico and the EU, and has torpedo'd efforts to challenge China's trade dominance (TTIP, TPA, TISA). While also implimenting tariffs on goods that have a negligible effect on China, like steel/aluminum and solar panels, but have a dramatic effect on some of our allies.

Now these tariffs are a warning shot to China, the beginning of the USA declaring that we are the largest consumer market and we won't be pushed around. The bottom line is that Trump has decided that the calculated, subtle efforts of the Obama administration are not the best tactic and is basically aggressively forcing the hand of every country to address global trade and specifically how China and Russia are not playing fair.

The problem with Trump and his approach to policy, including this trade policy is:

1) He's so transparent that he appears stupid, basically playing a poker game with his cards showing
2) His approach is always to start from scratch rather than building on existing frameworks
3) His policy decisions are highly influenced by emotional state and his personal feelings about other people(his advisors, World leaders)

So the real question is: Is it a better options to stop trading with China and build the trade frameworks with other nations that will meet our trade needs and adhere to our terms(TTIP, TPP, TISA, NAFTA) or to take a brute force approach and start a trade war with nearly every nation on the planet?

Trump is not accurate in saying NAFTA, TTIP, TPP and TISA are bad deals and we should abandon them, he also doesn't understand that if he stands alone and enrages our allied nations, they eventually will just work around us, so the option of the brute force approach also includes other nations stop trading with us, which is a bad result.

Trump works on the assumption if he can negotiate a better deal, then the current deal is bad.

That is his justification for screwing subs for payment/work. Basically stuff many developers do with subs to max their profit.

Actually what is happening is this debt is being monetized by FED not by raising taxes (taxes are in fact now lower). By the FED buying bonds they are keeping interest rates artificially low it makes financial assets of all types artificially high. So you take a rich senior citizen who is collecting lots of entitlements and has assets ballooning in price due to FED action you have a system where certain segments are benefiting greatly over others, this is why the gulf between rich and poor is widening. Politicians never articulate what is going on and the regular Joe can't figure out how he is getting screwed. It is not because I buy cheaper imported products.

All I know is that the US trade deficit, as a percentage of gross domestic product, has actually been
steadily shrinking , not growing, over the last ten years. It is likely self-correcting and is likely to become lower and lower in the future years for natural economic reasons. So to answer the title question, no.

Shrinking, not growing? I'm sorry, what? The arrow is around when we started making a lot of trade deals, and China started industrializing and stealing US knowhow while US politicians let them:



True, we were higher pre GFC, but claiming it's shrinking not growing is a pretty big stretch. The GFC's impact caused a violent correction up from massively negative to just very negative as everyone was too broke to buy stuff, but since the difference bottomed almost 10 years ago it's gotten nearly twice as bad. Especially compared to history, I can't see any justification at all for claiming it's getting better. Any trend line you draw since "free trade" started coming online in the 90s has been very negative, mostly due to China both duplicating and targeting US manufacturing and then using that stolen knowhow to compete with us in third country markets.

As our GDP grows , the same raw size of the deficit had less impact on our economy, right?. Also who cares what happened in 2005? So use a graph that adjusts for GDP and that focuses on recent years. Then re read when I wrote.

Sent from my Pixel XL using Tapatalk

He said the trade deficit was shrinking as a percentage of GDP

https://fred.stlouisfed.org/series/BPBLTT01USQ188S

i.e. even if the trade deficit has increased it has increased more slowly than GDP over the same period.

well named,
I'm not sure if you noticed but your graph ends five years ago in 2013 and the trade balance is 30% worse since then.

At best you can say that trade balance to GDP is flat to worsening with no sign of improvement. It absolutely false to say it's been steadily shrinking. The only reasonable conclusion you could make is that the deficit is increasing in absolute terms and about flat in terms of GDP, a steady wealth bleed of -2.5% of GDP/year. Considering that that's a disaster (see: the Warren Buffett article, US federal debt levels alone soaring $10 trillion in 9 years), the notion that everything is ok and naturally fixing itself is an unjustifiable claim.

Your claim that debt to GDP has been steadily shrinking is false unless you pick the height of the pre-GFC spending bubble. Why pick 10 years and not 5? Or 20? Or since the GFC?

You "10 year" data will look terrible and show the exact opposite in about 6 months, which shows the problem with your cherry picking, hence my graph to point that out.

Your last sentence is a complete non sequitur, by the way.

"Your accountant only stole $230K this year, down from $270K in earlier years, also your salary is going up so therefore you're not getting fleeced and should stop whining" is the logical equivalent of your last sentence. It's actually hilariously illogical.
I read what you wrote. There's no up to date deficit to GDP data in graph form that I could post. And your view that trade deficit to GDP is shrinking hence no problem is simply false.

Hard measurable wealth flowing out debate was settled in the 18th century and mercantilism lost, which led to the largest ever creation of wealth in human history.

The US is at full employment, so trying to create low skilled manufacturing jobs is pointless at best.

Criticizing China for meeting the desires of the most consumerist society on earth, primarily manufacturing products for US corporations anyway, is ridiculous. Stop buying tons of plastic and metal crap and your deficit will go down.

Also, I'd bet a lot of people parroting the evils of trade deficit have no idea that it's also created by tourism (Americans spending more abroad than tourists in the US) and FDI in the US, both of which show the strength of the US economy.
Attract more Chinese tourists if you want to lower the deficit instead of slapping a tax on American consumers.

The sad truth is that this anti-trade crusade is an expensive political stunt that will at best make particular individuals richer at the expense of everyone else.

Not me; it's the loser in the article who's doing that.
The problem with the analysis is pretty simple: it's a snapshot, rather than an analysis of alternative possibilities*. Take this analysis:
Despite the fact that he basically admits that the trade imbalance is causing more foreigners to profit from US capital, the issue with this is really simple. Rather than explain, I'll give you a clear thought experiment.

A country called OpenCountry allows anyone to sell in its markets. It has a free market, high innovation, high wages, some excesses of spending sometimes.

A country called ClosedCountry allows no foreign sales of any kind into its market. It's completely closed. 60% of its population are slaves, and it copies the factories of OpenCountry, using the slave labor, to undercut OpenCountry's factories and then sell the goods for OpenCountry's cash. All of this cash it plows into three things:

- Building more factories to compete with OpenCountry
- Buying up OpenCountry's land, buildings, knowhow, companies and collecting a 10% return on capital
- Loaning to OpenCountry's spendthrift, compassionate and free global policeman government to collect interest

If both markets were open, even the slave labor advantage would be overcome by OpenCountry's better energy efficiency and automation, and a natural trade balance would be reached. But CloseCountry keeps its country completely closed because it has a strategy of slowly draining the wealth of OpenCountry and making it dependent on ClosedCountry, for strategic and military purposes.

What would the analysis above look like for this highly anti free trading market that's harmful to OpenCountry? It would look exactly the same. OpenCountry would appear to be spending too much relative to its means, appear to be an attractive place to invest, and the person who wrote that article would claim that it's OpenCountry's spending that's the reason for the trade imbalance, when it's actually that one country is closed and the other is open - to the detriment of the open country.

Do you see the problem? The analysis he does snapshots the situation and then wrongly attributes the cause, in exactly the same way he would if the above situation was true. The analysis is incapable of differentiating between a completely free trade situation that benefits both, and an anti free trade situation that eventually destroys one of them. Thus it is comical and worthless.

There is no analysis done of what things would look like if China followed WTO rules and didn't cheat on a massive scale (hint: The US would be far richer, and would still get cheap stuff). That's why the analysis is completely flawed in so far as it tries to identify a cause in the way it does.

*This is perhaps humanity's, and certainly academia's, most dangerous and destructive cognitive bias.

The bolded isn't true.

When you buy overseas goods:

- Tax receipts are lower because foreign produced goods involve far less local economic activity
- Foreign companies and countries gain more capital to compete against US companies
- For lower end goods, less skilled wages become on average lower, and the less intelligent/capable are less employed, increasing all kinds of government costs short and long term, from social security to medicare.

You're creating a false dichotomy here. It's not either/or; you can still have cheap goods with China not stealing IP, closing their markets, cheating at trade. This idea that "let China steal all our stuff and cheat in any way they want otherwise we won't have cheap goods!" is just nonsense.

Capitalism requires certain assumptions to work - namely that the profits flow to the innovative. In the China, the profits are increasingly flowing to a communist dictatorship with very low innovation and a state run economy. It's my theory that that's ultimately why global growth has fallen so much despite the tech explosion and the rise of emerging economies. Apart from the incredibly costly needless duplication of capital as China replaced perfectly good US & European factories for little cost advantage and zero innovation, when you take the fruits of innovation (profits) out of the hands of innovators, innovation declines.

I don't know nearly enough about trade with China to participate in this thread but if there is an issue, wouldn't now be the practical time to curb some of these inefficiencies and fix problems within the system? When our economy is doing well and can handle the disruptions that tariffs/"getting tough" will cause? Similar to any austerity measures or fixes that may impact a system negatively in the short-term?

It's just way too impossible to fix issues when the economy isn't doing well because people are already feeling enough pain.

I guess it's a fine line because you could disrupt the current growth cycle if you go too far with it.

That's why China is crushing it.

I agree that mercantilism is bad overall (which is why I'm for Trump increasing free trade by forcing it to stop), but it's very good for the party doing the exploiting. Targeted mercantilism on one side and open markets on the other = big wealth bleed and lower overall growth.

The US is at full employment doing what, exactly? We could be at full employment jerking each other off, and it would be awful for GDP. In fact, imagine that exact scenario. What would happen if we had $20 trillion of GDP jerking each other off? How long would it take for US wealth to bleed importing but not exporting? Do you see the problem with your "full employment" view? It really doesn't measure the economy.

No one is criticizing China for that.

What the actual **** are you talking about?

Foreigners spending in the US gives the US an $84 billion head start
The sad truth is that your sad truth is sadly not truth.

80 million Americans travelled abroad in 2016. 75 million foreigners travelled to the US.
Are you guys so poor?
¯\_(ツ)_/¯

Here's the graph of declining US trade deficit as a percent of US GDP. The impact is lessening.

And here are the two years you left out:

The deficit is growing at > 10%/year since your graph ended in 2016, which is much faster than GDP.



Please stop posting fake news. Thanks. The deficit is not shrinking as a percentage of GDP.

Add to that U6 is at 8%, and labor participation rate has dropped from 67% in 2000 to 63% today. "Full employment" is a political euphemism for a lot of people not working.

This is exactly why wages aren't really rising yet... unless you have skills. Truck drivers have gone from costing .40 per mile to costing .75 per mile since 4Q 2016. .40 was a 50k a year job. Low level employees in backwater places are still making minimum wage. Unsurprisingly the labor market is all about supply and demand. Some skills are well past full employment and no skills are still worth nothing.

A sign of US economy's strength.

The point is that the trade deficit is relatively small if you see the big picture. Here an article explaining why and countering Buffet's article.
http://www.continentaltelegraph.com/...-go-on-forever.

Btw, even anti-trade deficit Buffet didn't favor tariffs.