I just heard Donald Trump discuss foreign trade. He is shocked, I say shocked to find that the USA runs trade deficits and he blames this on our failure to negotiate good trade agreements. Pure nonsense. We have run a deficit in our foreign trade for decades. Our deficits in goods trade, which is what he was talking about, are offset by our surpluses in services which includes financial transactions. Since, as Trump should have learned at Wharton, a nation’s trade balance must always be zero.
He says one reason for our trade deficits is currency manipulation by foreign governments which in the case of China may be true since its currency is not traded on international exchanges. However, he accuses Japan of doing this which is impossible since its currency is traded on international exchanges, take it from someone who once traded foreign currencies. Now one can go through contorted logic to demonstrate how a country can take actions that influence currency values and thus “manipulate” its currency. Indeed, the USA has been taken to the World Trade Organization (WTO) for using Federal Reserve actions as ways to devalue the dollar, e,g offering zero interest loans makes the dollar cheaper. The action has nothing to do with devaluing the dollar and everything to do with stimulating the economy and this was the conclusion of the WTO.
Trump rails that we drive Hondas, Toyotas, and Nissans here in the USA but there are no Fords on the roads in Japan. He doesn’t remember that those Hondas, Toyotas and Nissans are made in the USA by workers “outsourced” from Japan. He doesn’t remember that the second largest car maker in the world’s biggest car market, China, is GM and one of GM’s best sellers there are Buicks made in the USA. Trump may know property but he hasn’t a clue about the auto trade.
Now Trump does have two good qualities to offer in the race for president, he will use his own money and he speaks what he thinks. The problem is he may wind up being as comic as Bernie Sanders. Now there is a contest to contemplate, Sanders Vs Trump. No end of good laughs.