“During former President Donald Trump’s term in office, he promised that higher tariffs on American imports would reduce the country’s large trade deficit.
At the time, many economists disputed that notion. Tariffs might marginally reduce the import side of the trade ledger, but they also reduce economic output (and therefore exports), so the net effect on the trade deficit was likely to be minuscule, they warned.
No matter. In 2017, the White House’s official Trade Policy Agenda highlighted how America’s manufacturing trade deficit had grown from $317 billion in 2000 to $648 billion in 2016. That was evidence, the document claimed, that greater levels of trade had triggered “a period of slowed GDP growth, weak employment growth, and sharp net loss of manufacturing employment in the United States.”
You know what happened next. Tariffs were raised. Then more tariffs were added. President Joe Biden took over and left Trump’s higher tariffs in place. American businesses and consumers paid the cost of those higher taxes. The average tariff rate on imports to the United States has climbed from 1.5 percent to over 3 percent, and annual tariff revenue has nearly tripled.
So what happened to the trade deficit? It didn’t fall.
In 2017, the last full year before Trump’s tariffs were imposed, America’s overall trade deficit was $517 billion. By 2023, it had grown to $785 billion, according to new Census Bureau data.
The story is the same when you look at the manufacturing trade deficit, the narrower category that the Trump administration had highlighted in that 2017 report. It climbed to over $1 trillion by 2021, nearly 60 percent higher than the 2016 figure that was cited by the White House as evidence that free trade was a failure.
Rather than reducing the manufacturing trade deficit, the higher tariffs likely led to its sharp increase, writes Ed Gresser, a former assistant U.S. Trade Representative. “Manufacturers import goods so as to turn them into other goods, and are big tariff payers,” writes Gresser in a post for the Progressive Policy Institute, where he now works as vice president for trade policy. “So the tariffs raised the costs of industries like automobiles, machinery, and toolmaking; they faced a bit more challenges competing against imports and succeeding as exporters; and the overall goods/services deficit grew more concentrated in manufacturing.””
“”I don’t think we’re going to see a deal like we saw in the first term,” Robert O’Brien, Trump’s fourth and final national security advisor, told Chalfant. “I think people were generally happy with [the previous deal], but as it turned out, the Chinese didn’t honor it.””
“The really frustrating thing about this is that Trump is fundamentally wrong about how tariffs work. He has been for a long time. Taxes on Americans are not going to change China’s behavior. That’s not theoretical. We have six years of real evidence. Tariffs are not saving American manufacturing. The trade deficit didn’t fall like Trump promised it would. China didn’t buy the larger share of American imports that were part of Trump’s supposed “phase one” deal. In the middle of Thursday’s debate, Trump even managed to confuse the trade deficit with the federal budget deficit (a mistake he’s been making for years).
If only Biden were in a position to highlight Trump’s clearly misguided views on trade and tariffs. But that would have required different choices over the past three-plus years (and a stronger debate performance from the president, who struggled at times on Thursday to be articulate).
Biden chose this outcome, and now we’re left with a choice between a candidate who doesn’t understand the fundamentals of trade policy and one who has foolishly gone along with that fantasy for political gain.”
“trade doesn’t need to balance. I have a trade deficit with my supermarket. They get more of my money every year. So, what? I don’t “lose.” I get food without having to grow it myself.
That’s a win for me and the food producer regardless of whether the food was grown locally or came from Mexico.
“Imports are great,” says Lincicome. “It means I can focus on what I want to do for a living and not go make my own food or make my own clothes. I can use those savings and buy other things that makes me better off.”
As long as trade is voluntary, trade is a win for both parties. It has to be; neither side would agree to it unless they think they get something out of the deal.”
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“Manufacturing output in the U.S. is near its all-time high. We make more than Japan, Germany, India, and South Korea combined.”
“You can’t buy the Seagull in the US. But I bet you wish you could.
A small hatchback around the size of a Mini Cooper, the Seagull is a fast-charging electric car and claims a range of up to 250 miles (at least according to its home country’s generous tests); BYD, its Chinese manufacturer, claims it can go from 30 percent to 80 percent charged in a half-hour using a DC plug. It’s hardly a luxury car but it’s well-equipped, with a power driver’s seat and cruise control. “If I were looking for an inexpensive commuter car … this would be perfect,” veteran car journalist John McElroy said after taking a drive.
The best part? Its base model costs about $10,700 in China. That’s about a third of the cost of the cheapest EV you can buy in the US. In South America, it’s a little pricier, but still fairly affordable, at under $24,000 for a top-trim version. Even in Europe, you can get an entry-level BYD for under €30,000.
These are absolutely screaming deals — exactly the kind of products that could turbocharge our transition away from gas and toward electric vehicles.
And it’s just one of many BYD electric cars on offer, from the compact e2/e3 hatchback and sedan (think a Honda Civic or Toyota Corolla) to the full-size, luxe Han EV, a more expensive option nonetheless selling for under $33,000 in China (it costs more than double that in Europe). Many of the options have an aquatic themed name: the Seal, the Dolphin, the Sea Lion.
The problem for Americans? The Biden administration is hell-bent on preventing you from buying BYD’s product, and if Donald Trump returns to office, he is likely to fight it as well.
That’s because the BYD cars are made in China, and both Biden and Trump are committed to an ultranationalist trade policy meant to keep BYD’s products out. They’ve seen what’s happened in other global markets that Chinese EV companies have entered. Shipments to Europe have increased astronomically; Chinese companies sold 0.5 percent of EVs in Europe in 2019 but they’re already over 9 percent as of last year. Companies like BYD make cheap, reasonably good-quality cars people are eager to buy.”
“The US Navy has a missile problem. A shortage of its best SM-6 missiles – multipurpose weapons that can sink ships, hit targets on land and intercept aircraft and other missiles – could doom its fleet. Missiles are being expended at a high rate in the current Red Sea fighting against the Iranian-backed Houthis of Yemen. What good are the Navy’s 85 destroyers and cruisers if they can’t shoot?
A little industrial ingenuity could end the crisis, however. Defense firm Lockheed Martin is proposing to arm Navy ships with a missile that normally launches from land: the US Army’s Patriot.
The Patriot is a deadly accurate munition, as Ukrainian and Russians forces have learned. The hard way, in the Russians’ case. But its main advantage over the Navy’s best SM-6 missile is that Lockheed makes a lot of them.
On paper, the US fleet is a giant floating missile magazine. Each of 72 destroyers sails with as many as 96 vertical missile cells. A cruiser – the Navy has 13 of them – has 122 cells. Each cell can fire various weapons such as an SM-2 surface-to-air missile or a Tomahawk land-attack cruise missile. But the best weapon that fits in the so-called “vertical launch system” is the SM-6.
The 22-foot, 3,300-pound SM-6 is the Navy’s only omni-role missile. Thanks to its sensitive built-in radar, it works equally well against targets on the sea, on land and in the air out to a range of 150 miles or farther. It’s even able to offer a defense against incoming hypersonic weapons.
But the SM-6 is complex. For a decade now, the Navy has been paying Raytheon to build 125 of the missiles per year at a cost of slightly more than $4 million per missile; the fleet has around 600 in stock. The production rate should increase slightly in the coming years.
Even taking into account the fleet’s large arsenal of less-capable SM-2s, there’s a real danger it could get overwhelmed by enemy missiles, drones and warplanes during, say, a war with China over Taiwan.”
“The Commerce Department has officially declared a trade war on cheap tin cans.
Last week, the department gave a green light to placing new tariffs on tinplate steel—the metal used to manufacture tin cans and a wide variety of other consumer goods—imported from Canada, China, Germany, and South Korea. While the new tariffs are far less extensive than the absurdly high trade barriers originally requested by Cleveland-Cliffs, an Ohio-based steel company that is one of the few companies in America to make tinplate steel, the tariff decision once again underlines the arbitrary and cronyist nature of federal trade policy.”
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“Because the tariff-petition process is heavily skewed in favor of companies seeking protectionism—among other things, the Commerce Department is forbidden from considering how higher tariffs might impact other parts of the economy, including consumers—industries that need reliable access to tinplate steel were prepared to take a hit.
The Consumer Brands Association (CBA), which represents more than 2,000 companies including Campbell Soup Company and other brands that stood to be harmed by the tariffs, estimated that Cleveland-Cliffs’ proposed tariffs would have added about 58 cents to the cost of the average canned food product. A separate study by the Trade Partnership Worldwide LLC, a pro-trade think tank, found that 600 jobs would be put at risk for every steel-making job protected by the proposed tariffs.”
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“A single American company was able to file a petition asking unelected bureaucrats to punish its competitors (along with many downstream businesses and consumers) in order to goose its bottom line, triggering a review process that cost taxpayer resources and forced other businesses to play defense in a game that’s deliberately rigged against them.”
“The U.S. launched a preemptive strike against Houthi targets in Yemen early Tuesday morning Yemen time, destroying four anti-ship ballistic missiles being prepared for launch, a U.S. defense official told The War Zone. This is the first time the U.S. has launched what a second U.S. official called an “imminent self-defense strike” against Houthi missiles being prepared to launch. The first official, speaking on condition of anonymity to discuss operational details, declined to say how those strikes were carried out, citing operational security concerns.”