Here’s how stupid Donald Trump thinks Americans are: speaking at a fundraiser for New Jersey Governor Chris Christie, Trump doubled down on his stupidity about the economy, resorting to his populist, nativist appeal, blustering, “Who the hell cares if there's a trade war?”
Boasting that his 35 percent tariff on imports from American companies that have outsourced to Mexico would serve America well, Trump resorted to second-grade economics, saying, "At least the United States is going to make a hell of a lot of money. And these dummies say, 'Oh well that's a trade war.' Trade war? We're losing $500 billion in trade with China. Who the hell cares if there's a trade war? 500 billion, and they're telling me about a trade war."
Of course, after his bluster, in typical Trumpian fashion, he backed down, asserting, "You're not going to have a trade war," because "China will behave" and "respect our country again.”
Trump bragged, "We are not going to be the stupid country anymore. Folks, believe me, we are viewed as the stupid country. We’re like a big, big sloppy bully that gets punched in the face and goes down. You ever see a bully get knocked out? It's a terrible thing, unless you're doing the punching, then it's OK. We are going to make great deals for our country. It might be free, it might not be free."
For those out there who believe that Trump’s plans to force tariffs on imports and penalties on companies that outsource would be a positive step for America, here’s a little class in economics:
As Tim Worstall wrote in Forbes:
There are some things that other people who live in other places can make better, cheaper or nicer than we can. When those people live in other countries we call buying those better, cheaper, nicer things imports. But the concept is no different from you importing food into your household by dropping into the Quick E Mart. You are getting the food cheaper, better or nicer than you can make it out of your own suburban lot. Buying some spanners from China is conceptually no different from this at all … the whole point of having imports in the first place. Exports are just the work we have to do to afford them. And look what such a tariff does: We now have to do more export work in order to be able to afford the imports we want.
That is, import tariffs make us poorer–and that really isn’t the point or purpose of having government or even an economy at all. Import tariffs are a stupid, no good, lousy idea and one of 45% on all Chinese imports into America is a particularly bad example of that bad idea. If implemented such a tariff would simply make all Americans poorer.
Another explanation of why Trump is an economic fool, from Scot Lincicome:
The idea that the U.S.-China trade balance proves that we’re “losing” at trade is the height of economic ignorance. For one thing, there’s actually a strong correlation between U.S. economic growth and an expanding U.S. trade deficit. Moreover, basic economics teaches us that trade balances reflect national savings, consumption and investment, not trade policy. Thus, every dollar traveling overseas to buy imports (in excess of our exports) eventually comes back to the United States in the form of investment, and our “trade deficit” is matched by a “capital account surplus.” In other words, we buy goods and services from foreigners, and they buy an equal amount of our exports plus our financial assets (aka foreign investment in the United States).
"Import tariffs make us poorer–and that really isn’t the point or purpose of having government or even an economy at all."
Tim Worstall, in Forbes
Cato’s Daniel Griswold:
A nearly universal consensus prevails that the goal of U.S. trade policy should be to promote exports over imports, and that rising imports and trade deficits are bad for economic growth and employment. The consensus creed is based on a misunderstanding of how U.S. gross do-mestic product is calculated. Imports are not a “subtraction” from GDP. They are merely removed from the final calculation of GDP because they are not a part of domestic production. Contrary to the prevailing view, im-ports are not a “leakage” of demand abroad. In the annual U.S. balance of payments, all transactions balance. The net outflow of dollars to purchase imports over exports are offset each year by a net inflow of foreign capital to purchase U.S. assets. This capital surplus stimulates the U.S. economy while boosting our productive capacity.
As far as it goes regarding Trump’s false claim that China is killing us, look here.
None of this matters to Trump supporters, of course, who swallow Trump’s simple-minded economics whole, barely noticing that it will choke America to death.