The Washington Outsider

Trade War: Perceived Woes Do Not Need to Lead to Real Economic Issues

4/6/2018

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Economic views tend to be based on the perceived benefits to the individual.  It is why Americans from all income classes prefer tax policies that reduce their individual tax burden, even if those policies are fiscally unsustainable and far more beneficial to the wealthy.  It is also why the managers of trade-dependent businesses generally prefer liberal trade relationships and why workers often oppose policies that favor imports.  Unfortunately, people are inclined to be terribly shortsighted when it comes to their economic interests.  As such, most people typically focus on their own narrow, short-term perceived economic benefits and exclude their broad, long-term economic benefits.  It is why those who wish to avoid an impending US-China trade war, including the Chinese government, have launched political campaigns emphasizing the individual impact.  
​As Washington and Beijing exchange threats of sanctions, market volatility has increased and corporate American has grown increasingly jittery, but little of that matters to average Americans.  Because the benefits of an expanding economy have not been evenly distributed, fewer and fewer Americans have a vested interest in the performance of Corporate America, even if stock performance ties into their long-term retirement plans.  What matters to most people is the impact on their incomes and their jobs.  Consequently, news coverage has framed trade policies in terms of employment numbers, which continues to be strong, and consumer costs.  Just as higher interest rates raise borrowing costs, which can also inspire business leadership to reduce payroll costs, volatility from a dramatic shift in trade relations can encourage businesses to reduce their payroll and lead to higher consumer prices.
 
Unfortunately, it is precisely this perception of a faltering economy that could derail a reasonable healthy economy.  Because the economy is just as susceptible to perception as it is to real economic factors, the world must be careful not to overreact to the anticipation of a trade war and other seemingly anti-business policy shifts.  Should investors over anticipate bad news, they can easily send the stock markets into a downward spiral, which can disrupt the flow of capital to the broader economy and force businesses to scrap heir plans to expand as well as reduce their operations.  The loss of jobs and income can, in turn, inhibit the ability of working class consumers to spend and consume.  Even if a trade war materializes between the US and China, recognizing the resolution of a trade war will likely mean greater restrictions to trade, analysts, investors, and business leaders need to focus on the real world shifts in economic conditions, which will only be felt months after new policies have been implemented.
 
The Trump Administration and supporters of his trade policies hope changes to US trade policies will help raise revenue for the US government, make US businesses more competitive on the global stage in the long run, and help fuel job creation inside the US.  Those opposed to Trump’s policy changes fear a loss of opportunity.  Like all things economic in nature, it is a question of who benefits, how, and when.  Cheap goods are irrelevant without jobs and incomes.  Trump’s focus on rebalancing trade relations in order to rebalance the US economy, so it better serves the interests of the US population, is part of an effort to provide greater benefits to the majority of people who have not seen sufficient benefits from decades of increased economic and productivity growth.  There will, of course, be losers in the short-term, but a healthy economy is beneficial to all in the long-term.  If economic news can be received under this more constructive and positive viewpoint, the perceived woes of a US-China trade war will be avoided and the struggles of real economic issues can be addressed.
 
For the most part, Donald Trump’s approach to tariffs has been to balance existing tariffs and trade barriers against US goods.  For its part, Beijing has responded by targeting products that Chinese consumers like to buy in industries politically connected to the President.  Through initiatives like the $300 billion Made in China 2025, Beijing has also continued to promote Chinese industries above foreign competitors.  If a true trade war materializes between the US and China, America-based companies will lose access to potential opportunities in China, which come at the cost of their long-term competitive edge on a global scale.  In the broadest of terms, the US needs to balance its ballooning trade deficits.  China, of course, has an interest in maintaining a global economic that favors its expansion, thus Beijing is inclined to embrace escalation instead of conflict resolution.  Beijing has a compelling, self-serving economic reason to stoke fears of economic woes, but it also has a broader, long-term interest in a stable, balanced global economy.
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      • Should One's Faith Influence a Citizen's Vote?
      • Should the U.S. Government Help Fund Election Campaigns?
      • On Defunding Political Science Research
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      • Justice for All: The Case for Legal, Social, Economic, and Personal Justice
      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
      • On the Baby Boomer’s Self-Centeredness
      • The Case for Personal Responsibility
      • What Modern Day Revolutionaries Need to Learn from Leader's like Mandela
      • Rising Western Acceptance of LGBT Primes Culture Clash
      • The Need for Wisdom Beyond the Numbers
      • Perceptions of the United States
      • How Honesty Relates to the Great Recession
      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
      • Why New Forms of Capitalism and Socialism Will Compliment Each Other
      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
      • Why Are We Against Terrorism?
      • Why Does Terrorism Exist?
      • US Influence: The Value of American Citizenship Around the World
      • Responding to "the Soldier as Sacrficial Victim"
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      • How comfort defines us as people >
        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
      • Defining Abuse >
        • On the Willing Victim of Abuse
        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
      • Trying to Understand PTSD and Other Trauma-induced Mental Health Issues
      • Exploring Human Emotion >
        • Mental Illness is Not the Cause of Anger and Violence >
          • Trying to Understand the Boston Marathon Bombing and Other Violent Crimes
          • Getting into the Twisted Mind of the Tucson Murder
      • Describing the Mind as Modes of Thought >
        • It’s Just Sex?
      • Relationships, or Arrangement
      • Understanding the Effects of Groupthink in the Workplace
      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
      • What is a Redneck? Understanding Different Cultures and Thinking
    • Economics >
      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
        • Undercutting Logistics with the Underpaid Independent Contractor
        • Unions: Hindrance or Essential to Free Markets
        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
      • Empowering the Sovereign Nation-State by Rethinking Trade Policy >
        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
      • Income inequality: understanding the limitations and psychology of disadvantage
      • Looking at the Future of American Jobs >
        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
      • Embracing a Capitalist Mindset >
        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
      • Consumer and Investor Evolution in the Great Recession of 2008-09
      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
    • Education >
      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
    • US Constitution >
      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
      • The Second Amendment: Not Outdated >
        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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