How Trump misunderstands trade.

NY Times with an excellent primer on why Trump and others are completely wrong about trade deficits. If progressives are going to join libertarians in opposing Trump's economic nationalism, this is a very good read from which to learn the basic economics involved.

"Protectionists like Mr. Trump always complain about the United States’ trade deficit for goods but mention neither the surplus of foreign investment capital that we get nor our trade surplus in services.

Here’s how it works: The American dollars we use to buy imports are of little use to foreigners outside our borders. They are, however, of great use to foreigners who want to invest within the United States. And that’s what happens with the dollars that aren’t spent on American exports.

Foreign investment is key to our economic growth here at home. In other words, we Americans win when we get to buy the stuff we want from abroad and when those dollars are pumped back into our economy.

This benefit remains intact despite Beijing’s many violations of our trade rules — such as its subsidization of Chinese steel makers. It’s true that those subsidies artificially lower the price of steel imported by America and might hurt some American steel mills and workers. But this effect is the same as it would be if Chinese steel makers had a genuine efficiency advantage over our producers. Despite the administration’s constant refrain about the devastating impact of foreign export subsidies on the steel industry, experts know that a vastly greater number of steel jobs were lost to innovation, not trade."

Let's pretend the trade war isn't about the Shanghai crude futures trading in a currency other than US dollars. Unlike what happened with Libya and Gaddafi, military conflict with China to maintain petrodollar is not on the cards. Bullies after-all like to prey on the weak, and China is anything but.