Trump Is Right to Battle China on Trade, But Now Comes the Hard Part

[ironchef]

What I do not understand about it all is why the trade imbalance is such a big deal now, as opposed to before?

Let us start at the start of the Obama administration in 2008, the beginning of the recovery.

We had a trade deficit with China, and it grew.

We had high unemployment, and it shrank.

As people started finding work as the economy recovered, we as a people had more monies to spend. So we bought stuff.

Fast forward to end of Obama. 2017. Our trade deficit with China is "hugeish", and keeps growing. Unemployment keeps shrinking. Wages are rising. Personal spending keeps rising.

2018. Trade deficit keeps rising. Unemployment keeps shrinking. Wages are rising. Personal spending keeps rising.

2019. Trade deficit keeps rising. Unemployment keeps shrinking. Wages are rising. Personal spending keeps rising.

Now all of a sudden in mid 2019, the trade deficit is a bad thing? What would happen if this pattern kept on the way it was? I do not understand.

I think what is missing in this expansion is the lack of high paying middle class jobs. Most of the growth are from Walmart, Amazon.... hiring low paying service jobs.

 

[SunTrader]

I think what is missing in this expansion is the lack of high paying middle class jobs. Most of the growth are from Walmart, Amazon.... hiring low paying service jobs.

Is that China's fault?

Or another way of putting it, is making them our whipping boy going to change things?

tRrump seems to think it will get him re-elected. Many thought he was a bitnit man not a pol. LOL

 

[LS1Z28]

Now all of a sudden in mid 2019, the trade deficit is a bad thing? What would happen if this pattern kept on the way it was? I do not understand.

Look back at the year 2000. We were in our 4th straight year with a GDP above 4%. Our unemployment rate was the lowest it had been in over 30 years. We collected so much in tax revenue that we had a budget surplus.

In 2001 China joined the WTO, and things started to shift. Since then we've closed about 60K factories and lost 5 million manufacturing jobs. Our annual GDP has dropped from 4% to around 2 to 2.5%.

The trade deficit has always been bad for us. We just haven't had someone in the white house willing to go up against China until now.

 

[Overnight]

Look back at the year 2000...

Sep 11th, 2001 happened. That changed the world. Bad example. Do you need a refresher course on how bad that shit was for the world's psyche?

 

[Stockolio]

Thesis, lucky you can spell it.

Truth hurts, commie ? Playa hating on a great Thesis

 

[destriero]

Cornholio is East Asian. He knows more about the wonders of communism than anyone here, other than CSETrader. Right, Comrade?

 

[LS1Z28]

Sep 11th, 2001 happened. That changed the world. Bad example. Do you need a refresher course on how bad that shit was for the world's psyche?

I remember how bad it was. But China's GDP grew steadily over the next few years. They went from 8.5% in 2000 to 14.2% in 2007. Our GDP fell from 4.1% to 1.9% over the same time frame. I don't think 9/11 is responsible for the mass exodus of manufacturing from U.S. shores, and the ballooning trade deficit with China.

 

[Overnight]

I remember how bad it was. But China's GDP grew steadily over the next few years. They went from 8.5% in 2000 to 14.2% in 2007. Our GDP fell from 4.1% to 1.9% over the same time frame. I don't think 9/11 is responsible for the mass exodus of manufacturing from U.S. shores, and the ballooning trade deficit with China.

Then you do not understand what 09/11 did to the US, or the psyche of the world. I was there. The change was palpable for years. It still hurts, almost 20 years later.

 

[luisHK]

No. Your math is wrong. US exports are 3.5% of the GDP, means rest of the 96.5% GDP is not effected. Assuming 7% GDP growth rate, new growth rate will be around 6.76%. This is ignoring any substitute effect increasing domestic growth.
.

Well... I don t get it.
If China lost 3.5% of their GDP previous activity, how could the next growth number, assuming still 7% increase on other parts of GDP, be 6.76% ?
I understand the operation you did (96.5% of 7%) but can't see the logic behind it.

 

[LS1Z28]

Then you do not understand what 09/11 did to the US, or the psyche of the world. I was there. The change was palpable for years. It still hurts, almost 20 years later.

It will always hurt. I know that 9/11 and the war on terror caused an economic downturn in our country. But I'm looking at the big picture of the past 18 years.

You asked why the trade deficit was a bad thing. Since China joined the WTO back in 2001, we've closed 60K factories and lost 5 million manufacturing jobs. Their GDP grew for several years while ours declined. This resulted in a huge trade deficit with them. I don't really think that's a good thing for our country. We would probably be a lot better off if the deficit were more balanced.