"We were losing a trillion dollars a year on trade. Now we're not losing anything, you know? That's just the way I look at it.” - Trump
It is INSANE that somebody this stupid managed to make it this far in life. Only in America
https://x.com/SpencerHakimian/status/1920179417029972039...Making such statement makes Trump unqualified to be President
...As I told you before, he erroneously believes that America buying/spending (import) more than exporting means greater expenses [more spending than others buying their products = lower profits on P&L basis] which must be bad for the US economy. Economics does not work the same way as accounting.
...US does not save $1 T simply by making US-China trade embargo permanent with the high tariffs
a. it would decimate US importers/distributors and US exporters to China- a large proportion of which are US small and medium businesses and farmers
b. it would reduce trade circulation need for USD diminishing the dollar's relative importance in international capital flows
c. The $1T that Trump claims it saves will be further from the truth:
i. US import-export (trade deficit) has been widening over the past months to pre-empt tariffs
ii. Demand for Chinese products will either continue albeit at a lower level despite tariffs or gets re-directed to other foreign markets as the US would be unable to suddenly absorb all that $1T demand domestically
The problem we have is a President who makes untrue statements to his local audience who by and large do not understand economics while no one in institutions dare to correct him to set the record straight. This is dangerous because what the President says is that if there is no deal with China, its okay because US will save $1 T in trade deficit that US is experiencing with them.
My read is that Trump's statement is one of bravado to pre-empt the prospect of China not agreeing to any deal, more like a message to his domestic base that it is no big deal if there isn't a deal, and that US would make a $1 T.
If it is true that US would save a $1 T, why then would Trump/Bessent be in so urgent need to call out to China to make a deal, time and time again with Bessent stating it is 'unsustainable' for China not to?
