Protectionism Is Coming

My first reaction to this article is to say the writer wants a job in the Trump White House. Which is to say, expect more. Arguments and debates supposedly "settled" are going to open back up. Donald Trump may not win the presidency, but the winner will be someone closer to him politically than most expect.

FT: China does not contribute one cent to global GDP
China’s official trade surplus – its huge goods surplus and sizable services deficit combined –was roughly $180bn last year. This constitutes $180bn subtracted from the rest of the world’s GDP. China has been running large trade surpluses for a decade, each and every year subtracting from the rest of the world’s GDP, not contributing.

Slower Chinese GDP growth would, in itself, mean nothing at all to anyone outside the country. What matters to GDP is the size of the trade surplus. If it rises, then rest-of-world GDP falls by that amount (everything else constant). In this case, the trade surplus is also a reasonable representative for China’s true impact on the world. A rising surplus says China is pushing down prices around, intensifying existing deflation.
In order to boost the U.S. economy, a protectionist Trump would have to force China to buy more U.S. imports or put tariffs on everyone because production would shift from China to other nations, not directly back to the U.S.
Protectionism is a short-term win for trade deficit nations that can onshore production though, which the U.S. could do for a lot of imported goods. It would also blow up the international system of trade and politics as well, since the U.S. returning to business as usual (the business of America is business) would eventually lead to a return to Fortress America.

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