Imbalanced Trade Can Make Perfectly Good Sense
President Trump is a bully.
Everything he does in business and politics is based on his leveraging wealth – his or that of the country whose executive branch he now manages – over financially weaker opponents, to his advantage at their expense. In the private sector, it’s how he gets away with not paying his contractors. In the Oval Office, it’s what he’s doing when he uses tariffs to hurt even our closest, most essential allies. Being a bully is all he knows.
Just because another economy charges tariffs on American products, doesn’t mean our government should hit back with counter-tariffs as great or greater.
Why have other countries – smaller developed nations whose Gross Domestic Product is only a small fraction of ours – imposed tariffs on cars and other purchases from the United States? Because if they don’t make our products more expensive relative to the prices of those same items they produce domestically, we have the economic power to put those domestic producers out of business and trash their economies. Those other country tariffs that Trump finds so annoying are the only way they can survive. The power differential between our economies is that great.
Sure there’s an imbalance of trade. Of course, they want to sell us more than we buy from them. For these prominent, but much smaller economies, the imbalance of trade in their favor is an existential relationship that Donald Trump is now doing his best to destroy. At the expense of our allies – and American consumers as well. Not because trade wars make sense, but because they don’t. Because imposing tariffs on these smaller economies is somehow fair because it’s not. But because he can.
This is what making America first is all about. Selfish economic behavior for purely egotistical reasons, without thoughtful economic or geo-political bases, from which everyone suffers.
Will hurting our allies’ economies help ours? No. Make no mistake about it, the United States economy – your income and mine – do not benefit from the United States pushing the world economy into chaos and recession just to feed the ego of a President who hasn’t a clue and couldn’t care less.
Les Cohen is a long-term Marylander, having grown up in Annapolis. Professionally, he writes and edits materials for business and political clients from his base of operations in Columbia, Maryland. He has a Ph.D. in Urban and Regional Economics. Leave a comment or feel free to send him an email to [email protected].