Trump’s Trade Deficits
Six ways Washington handicaps U.S. exporters
First, it’s questionable that living standards have not increased. Consider the iPhone, Uber, and Amazon’s time saving convenience and prices—all these effects upon living standards can’t really be measured and economists’ analyses don’t include events which they can’t measure. Their profession is built upon measuring what they are able to measure. Secondly, average Americans see imports from China and Mexico first hand at Walmart when shopping for simple household goods. They don’t see the multi-billion dollars of exports of jet aircraft, armaments, movies (just one can earn the U.S. some half a billion dollars), computer chips, oil drilling equipment, some $130 billion of agricultural exports, and vast other quantities of hi-tech goods and knowledge products. Foreign tourist spending in America is also less noticeable to many.
Moreover trade deficit statistics are very misleading, as Time reports, as China’s apparent billions of export surplus includes iPhones. But actually only $10 on each phone is “earned” by China for its assembling; inputs of costly vital parts come mainly from Japan, Korea, Germany, and the U.S. But their costs as Chinese imports are not shown in the trade deficit figures with America. Most of the cost and profits stay in America from the intellectual property rights and patents. Manual assembly lines in China lower the cost enough as to make them affordable for millions; if they were assembled in America, as Donald Trump proposes, their cost would be prohibitive. An excellent article in Slate explains Apple and the whole framework of modern world trade. Appreciation of China’s currency would have almost no effect on the end price of an iPhone as this study shows in a detailed breakdown of the manufacturing process and the non-Chinese inputs.
Beyond all the above, Big Media rarely explains the stifling, monumental costs of many Washington impositions and regulations. These add tremendously to the costs, particularly for American manufacturers. Services are less burdened, which is one reason for their exponential growth and export surpluses.http://www.theamericanconservative.com/articles/trumps-trade-deficits/
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