Trade deficit: Trump is not lying, he merely ignores half of reality

in politics •  9 months ago

Or in other words: Trump is making up his own Fake News.

If you have watched President Trump’s tweets a bit closer, you will likely found some patterns.

One of those patterns is that the more often he repeats something, the farer away from the truth is his “opinion”. Maybe he needs that for self-reassurance, or maybe he is using that out of calculations.

If you know my opinion about the megalomaniac you may be surprised that I actually tend to think the latter option. He may be an idiot and a narcissist, but he knows how to hide that with words. (Experience?)

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Whatever is the case, I must admit that even while I was wondering why Trump trumpetes the “trade deficit” so often, I didn’t question it. I thought it was just to appeal to his fan crowd and to divert from his failures and that the numbers are actually (more or less) correct.

Also I am a German and we even call ourselfs proudly “export world champions”. I don’t think that is something to be proud of, but for most Germans it is a point of pride.

153 billion dollar trade deficit for the EU in US trade does not seem surprising when you know that Germany has an export surplus of more than double that (with all countries).

However, turns out I am as wrong as Trump is on the trade deficit.

Because Trump’s number only includes material goods traded. If you had an eye on “trade agreements” in the last years, like ACTA, TTIP, NAFTA and so many more, you will already know that they are mostly not about the trade of material goods and tariffs. That is because there are not many tariffs left at all (GATT 1947 and other agreements), and those are mostly in the single percent area.

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More important in the last years were the “non-tariff trade barriers” and “investment protection” (FDI, Foreign Direct Investments) agreements to circumvent the normal jurisdictional system for the benefit of big companies.

With import and export calculations it is similar. If you only look at material goods, you only get half of the picture. Very important are also the service sector and financial transfers, especially in the case of the US, since both are at the core of what is sometimes called “the US economic colonialism model”.

Let’s look at those numbers too. Remember: Trump trade deficit was 153 billion dollar.

Service Sector:

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Banks, PR firms and not to forget the “silicon valley” companies. Apple, google, Microsoft, Facebook and so on all make business in the EU. This difference amounts to 51 billion dollar.

153 – 51 = 102 billion.

Profit transfers:

Often done by the same companies as above. Profits of their EU subsidiaries are moved with tricks into the US. “Tax optimization” schemes play a big role here. Amount: 106 billion dollar.

102 – 106 = -4 billion dollar. The US already has a trade surplus with the EU instead of a deficit!

And that is only looking at companies. Private money transfers amount to 10 billion more.

14 billion trade surplus of the US with the EU!

By the way: An export surplus can always be seen as an import deficit.
Maybe the HUGE export surplus of China (also, like in the EU case, only goods counted) is because Apple builds the iPhones in China (and imports them into the US) instead of building them in the US?

If you as a US citizen don’t like that China exports so much stuff into the US, then the fastest, easiest and most reliable way to change that is to not buy stuff from China.

Source (German)


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it's not that we don't like importing stuff from china we just want to ensure that we are doing so under the most advantageous terms, for example the Kyoto agreement allowed china to increase emissions until 2035 while asking the US to stop expanding emissions, obviously that puts us at an economic disadvantage. Those are the sorts of agreements we won't be making anymore. Trump is not an isolationist, he just wants a better deal than the lousy ones we have been operating under in many cases.


Strange. Most of the trade agreements - or all - the US has are based on US initiative and favor the US. How come?

the Kyoto agreement allowed china to increase emissions until 2035 while asking the US to stop expanding emissions, obviously that puts us at an economic disadvantage.

Uhm... no.

First of all there is no God given connection between economy and emissions.

Second, you already have a HUGE advantage compared to China and if I am not totally wrong, the allowed per head emission is way bigger for the US then for China. Now that is an disadvantage for China, isn't it?

Third there are several possibilities where the US could lower "their" output by doing something in other countries. This is under the simple idea that it is everyone's athmosphere anyway, so if it is way more effective to reduce CO2 in place B, then country A could do that if B cannot.

btw that mechanism is already in place from the other side: The US (and other "western" countries) have put their most polluting industries into China and elsewhere.
If you would place them back, the US would have way more emissions and China less. But it would reduce the (non-existing) trade deficit, so why not start?

just want to ensure that we are doing so under the most advantageous terms,

Well, and that exactly is the problem. Because that doesn't work in the long run. "most advantageous" is not fair. It isn't even a even a deal. It is just a slave holders position.

"most favoured nation agreements" are always destroying.


how come? the eternal question, but I would have to agree with your premise, but I don't. We can always negotiate better deals can't we? why not?
Nope, China didn't have any limit until 2035. So yes you are totally wrong. That is why that was a shitty deal for us.

LOL It's "not fair"! "A slave holders position" Nope, just a nation acting in its own best interest for the benefit of its own people. We need to be fair to ourselves, other nations have been doing it all along to our detriment, now we will put America First in our dealings. Angela is supposed to put Germany first isn't she?


other nations have been doing it all along to our detriment

I know you are not getting much of non-US history in the states - but that it is THAT bad?


We don't even learn American history past about 1870 in most US History classes, enlighten me. Tell me how other nations don't put themselves first.


That was not the Question. The question was about being fair. Sometimes you can even putyourself first *and be fair.
But if you don't even try to be fair...

Since you had China and Co2 as example: Why not take this?
China agreed to emit less CO2 per head then the US, even while being the pollution dumb (production wise) of the US.
They could rightfully have said: Fair is to limit us and the US to the same number. Doing that we would still have 100 years time before we even need to think about reducing our emissions!
But they even more rightfully said that if they do it, everyone suffers.

In the past, most agreements that involve the US have been to mostly profit the US, and they often screwed the other country. The simple reason for this is the power balance. If the US wants something, then they get it or you get to taste the stick (*1).
Just look how Hollywood exported their copyright demands to other contries. That hurts everyone (except Hollywood), but since Hollywood, especially disney, is a mayor payer of bribes - sorry, campaign donations - the US politicians do as Hollywood wants.

*(1) My favorite example for that (has nothign to do with agreements, but it is still enlightening) is the Iran.
The Iran was once the most advanced country of the Near-Eastern region. They had a working democracy and an elected president that surprisingly worked for the people. Women were often studying at universities - at a time where in the US you still had segregation.
But that president wanted to use the countries oil to help his citizens, and that was something the US didn't like, they wanted a big piece of the cake. So they staged a revolution.

The rest in short:
Ayatollah Chomeini and a religious state
World Trade Center
Syrian war

Every time the US "intervened" to advance their (economic) interests, sometimes with weapons and money, sometimes with troops, and the result was always a big suffering.
No wonder they don't teach that to you patriots in school!


LOL, life is not fair. Many films were produced in Germany to get government film credits, should the Germans have worried about how that would harm Hollywood? Those German films don't benefit from international anti piracy copyright protections?
That's a funny anti American view of history. You forgot the part where Iran aligned themselves with the Nazis. Anyhow that was a long time ago.