Why Trump's unusual tariff strategy might make more sense than you think

Traditional economic wisdom favors free-trade but current global trade patterns show interesting shifts. While economists prefer exchange-rate fixes Trumpʼs targeted tariff approach has its own non-standard logic

November 17 2024 , 06:11 PM  •  486 views

Why Trump's unusual tariff strategy might make more sense than you think

Most economists dont like tariffs‚ they say free-trade works better and currency rates should fix trade problems (which is like putting same-size tax on all imports and giving same-size help to exports)

The trade-balance thing needs some explaining: many think country with trade deficit is losing money - just like a failing business but thats wrong. Trade brings good stuff to everyone; its not about who has more money at the end. Poor countries often need deficits to grow but hereʼs the weird part: rich USA has deficit while less-rich Asian nations (including China) have extra cash

Countries like JapanGermany‚ and Switzerland keep big trade extras compared to what they make - they sell lots of stuff to other places to keep their factories busy. The USA and others take their goods and give money-papers back: sounds ok until you think about what happens next

Hereʼs what makes it tricky; saving more money could fix USAs trade numbers but that means:
* Less spending inside USA
* Less jobs for workers
* Lower growth in economy

Trump likes his way better - putting different-sized tariffs on different stuff from different places. His plan helps US make more things at home (manufacturing usually makes workers do more per hour than service jobs do). But its not perfect: prices go up and some business-groups might get too much protection

After the big money-crash about 15 years ago trade differences got smaller but now theyʼre getting bigger again. If countries with extra trade money dont change their ways we might see more leaders do what Trump does