Raymond Richman - Jesse Richman - Howard Richman Richmans' Trade and Taxes Blog

How Trump could avoid a Trade War -- We're published in the Washington Examiner this morning

Howard Richman, 5/31/2016



We begin:

Donald Trump argues that recent trade deals and trade deficits have been bad for American workers, and that he could do better. Some have argued that his proposals would start a trade war. But if he comes up with the right BATNA ( B est A lternative T o a N egotiated A greement), he could move trade toward balance without a trade war. In August 1971 President Nixon used a 10 percent across-the-board tariff as his BATNA in order to force the successful negotiations which brought U.S. trade into balance by 1973. But U.S. trade deficits were small in Nixon's day and huge today. Trump will need a much more powerful BATNA than the across-the-board tariff used by Nixon. Trump has proposed single-country tariffs against Mexico and China of 35 percent to 45 percent. Such tariffs would indeed provide a very powerful BATNA. They would balance trade, even if the negotiations fail, because the United States would shift its import purchases to balanced-trading countries that buy more from us when we buy more from them. The revival in American manufacturing that Trump desires would occur. But such tariffs could lead to a trade war. The countries involved would likely place counter-tariffs upon politically-sensitive U.S. products, such as American agricultural goods. Fortunately, there is a BATNA that Trump could choose which would avoid a trade war altogether.

To read it, go to:

http://www.washingtonexaminer.com/how-trump-could-avoid-a-trade-war/article/2592519

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Global Trade down 9% since 2014

Howard Richman, 5/25/2016



Robert Romano, writing on Net Right Daily, Americans for Limited Government's website, reports that global trade is down about 9% since 2014. He begins:

Global trade is collapsing. In March, the U.S. trade deficit took a big hit, dropping 13.8 percent amid an $8 billion contraction in imports and a $2 billion shrinking of exports, according to data compiled by the U.S. Census Bureau.

Most economists think that global trade collapses during global economic recessions due to the fact that countries often raise their tariff rates during those recessions. But the causation is different. First trade becomes imbalanced. Then the trade deficit countries get into financial problems and can no longer buy as many imports from the trade surplus countries. Then trade collapses and world growth stagnates. Finally, trade deficit countries impose balancing-trade tariffs upon the products of the trade surplus countries which allows them to get out of the recession. So the economic recession itself causes both the decline in world trade and the rising tariffs.

We are not the first economists to understand that imbalanced trade leads to global economic slowdowns. We attributed that understanding to John Maynard Keynes in our journal article about our Scaled Tariff when we wrote:...

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Jesse was interviewed by Fox News on Saturday

Howard Richman, 5/3/2016



Here's the link:

https://www.youtube.com/watch?v=KVvWWEwZtug&app=desktop

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