The Washington Outsider

Trump Must Tackle US Trade Deficits, Not Just Alleged Dumping

7/14/2017

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Trade both fuels economic growth and threatens the economic interests of domestic workers and businesses that derive their earnings mainly from their local economy.  Increased trade can offer consumers access to new products and suppress the rise of prices for products consumers already enjoy.  Trade helps increase the standard of living for domestic consumers and foreign workers, yet it can also diminish the standard of living for domestic workers, deleverage the taxing and regulatory authority of government, and undermine industry standards, product quality, and product durability through degenerative competition based primarily on price. 
 
Too much trade can also make domestic economies over-reliant on foreign production, which leads to inflated prices and shortages during periods of crisis.  In turn, it can make export economies overly reliant on foreign consumption and globally sourced goods, which have a limited supply, instead of loyally plentiful goods.  In short, trade can either help bolster the economies of trade partners to ensure economic prosperity or foster unbalanced, unstable economic growth.  Alleged “dumping,” such as the dumping of steel, is one trade issue that the Trump Administration is struggling to address without undermining healthy trade.​
To address issues like dumping, people must, first, understand that economies do not behave based on what people want or feel.  Like cars and computers, the economy is a machine that can only respond the way it is designed to respond.  Public policies based on political decisions, public sentiments, and the emotions of leaders do not determine how an economy works.  Public policies and consumer behavior drive the economy, but they do not determine how the mechanisms of the economy will perform.  If people want their economy to perform a certain way, i.e. efficiently distribute national resources to fulfill the needs of the Peoples and their communities, policymakers must engineer economic mechanisms to deliver the desired results.
 
Trade policies must, therefore, be designed to maximize the benefits and minimize the costs of trade.  The consequences of trade policies cannot, however, simply be dictated based on want people want.  There are times when political considerations must be taken into account.  At the extreme, war dictates policymakers cease trade no matter the economic consequences.  For the sake of national and global security interests, policymakers must always take proactive steps to ensure their domestic economies do not rely on revivals and unreliable trade partners.  When it comes to potentially sensitive technologies and industries, the same precautions must be taken.    
 
Ideally, governments would only intervene in trade solely to address critical issues. The role of government is, after all, to shape favorable market conditions, not question legitimate business decisions.  All governments interject politics into economics, which inhibits the function of the economy.  Where non-democratic governments will dictate economic policies to favor the ruling class and secure their control over their economies, democratic governments will either shape economic policy in response to political sentiments or, if corrupted and ill-democratic, special interests.  Such interference can be minimized and shaped to play a constructive role, but it is unavoidable.  The way in which public officials intervene in trade relations, therefore, matters just as much as why.
 
When stores decide to sell a set of products at a loss, it is usually called a sale.  The store may need to simply clear its inventory or it may be trying to attract more customers.  Whether or not the store seeks to undercut competitors is irrelevant, because that is the result no matter the intention.  Over time, these practices can harm industries, but they are not a concern for government until monopolistic businesses start to arise.   Similarity, governments, as well as commodities exchanges, cannot set prices for products like steel to prevent competitors from competing for market share without creating issues like dumping and price bubbles.  Outside of predatory policies by foreign governments, the same principles apply to domestic and foreign competitors alike.  
 
In the case of alleged dumping and other trade issues, heavily subsidized, under-taxed, under-regulated, and/or poorer economies will always suppress the price of goods, thereby encouraging over-production.  If trade is unimpeded with such economies, unfair trade, including the selling of products for less than the production costs, i.e. dumping, will occur.  It has little to do with whether the government of the offending economy desires to engage in predatory trade or pledges to end a lack of trade parity.  It is the result of economic realities.  Similarly, public officials of democratic governments cannot rightfully promise to deliver economic performance or trade benefits.  
 
To that end, governments can only control what is allowed in and out of their borders.  They can only foster or impede economic development by avoiding or embracing punitive measures.  They cannot control what their partners do.  They can only do what is in the economic interests of their Peoples and expect their partners to do the same.  As such, dumping and other consequences of doing business with countries, which foster overproduction and/or offer cheap labor, must be addressed by balancing the cost of foreign products to ensure competitiveness based on price, instead of cheap labor, weak regulation, product quality, and product durability.  
 
Alleged steel dumping by China and America’s trade deficit with China, for example, is a function of economic disparities between the US and Chinese economies, cheap labor, state subsidies, and a regulatory regime that favors Chinese industry and artificial job creation.  Steel dumping may occur from time to time or be a minor problem, but the economic realities dictate US industries will struggle to compete if price is the determining factor.  Alleged steel dumping by countries like German, has a great deal more to do with the actual behavior of business.  Trade disparities between Germany and the US, however, also have a great deal more to do with the actual efficiency of the German industry, not predatory trade policies.
 
US competitors have an incentive to discourage trade with both China and Germany, but the US government and People have an interest in both fostering domestic production as well as encouraging domestic and global competition to encourage efficiency and lower prices.  Dumping should be addressed when it occurs, but dumping only offers a legal rationale for countries like the US to impose tariffs, or inefficient, disruptive quotas, when government needs to focus on bigger trade issues, i.e. economic disparities that create unbalanced, unstable trade.  Moreover, US policies need to balance price disparities based on why imports are cheaper, not because they are cheaper, in other to address issue trade deficits and dumping.
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      • 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
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      • 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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        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
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        • On the Willing Victim of Abuse
        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
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        • Mental Illness is Not the Cause of Anger and Violence >
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      • 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
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      • 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
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        • 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
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      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
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      • 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?
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      • On Reading the US Constitution
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      • On the DOJ Justifying the “targeted Killings” of US Citizens
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        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
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      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
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        • 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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