Why US Tariff Policy Won't Fix Global Trade

[Joe Leote]

Tariff policy analysis by economist Michael Pettis:

https://youtu.be/IEd69-k7cmg?t=1982

Joe

[William Meyer]

There are too few economists out there who rightly identify the balance of trade/payments as a problem.  Most - even Kelton - reject the issue as a problem to be solved harkening back to Smith.  But gold was always the self correcting mechanism then, there is none today.

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[Joe Leote]

The US national debt is not the real problem with persistent trade deficits with China. The real problems are in the domain of geopolitical strategy. China does not want to be locked out of international trade in US dollars, similar to Russia, but has no better alternative at this time. China wants to dominate international trade and use trade to rival the US as an emerging great power. The United States does not want to be dependent on China for critical strategic technology in the commercial supply chains and it does not want to fight China as a rival technological superpower in a conventional hot war. Setting tariffs by the arbitrary and capricious whim of an autocrat may destabilize the international order in the short run but no one can predict a positive or negative outcome in the long run. Trump wants the Republican Congress to cut taxes and suspend the debt ceiling. This does not seem to be about an effort to reduce the US national debt. The goal is to reduce inflation and interest payments on the debt as a percentage of some other metric in the context of playing a game of geopolitical strategy.

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