Tariffs deception 1
Tariffs deception 1
NWO media and politicians have started a campaign of misinformation regarding tariffs and trade deficits. They have claimed very many false things in a very short time period. We will not allow these liars deceive people anymore regarding this or any other matter. Since USA tariffs are the reason for NWO's campaign of misinformation, we will examine that country but the reasoning applies to all countries.
The largest trading partners are determined by the total of imports and exports. USA's largest trading partner is Canada. In 2021, exports to Canada where 308 billion dollars and imports from Canada were 358 billion dollars. The difference is 50 billions. USA has a trade deficit and Canada has a trade surplus. USA also trades with many other countries.
If we add imports from all countries, we get total imports. If we add exports to all countries, we get total exports. Their difference is USA's Balance of Trade (BOT). We get the same result if we add all deficits and surpluses. In USA, total imports are larger than total exports. So USA has a trade deficit. USA has the largest trade deficit in the world, 819 billion in 2023, according to World Bank.
The other nineteen countries with the largest deficits are; UK 110, Turkiye 45, India 32, Brazil 31, Romania 24, France 23, Argentina 21, New Zealand 17, Greece 15, Canada 13, Chile 11, Philippines 11, Egypt 10, Colombia 10. USA also has the second largest economy in purchasing power parity, after China. So the deficit as a percentage of GDP is not that bad, 2,99%.
For the rest of the top twenty countries, deficit as a percentage of GDP is; UK 3,31, Turkiye 4,06, India 0,91, Brazil 1,42, Romania 6,98, France 0,75, Argentina 3,36, New Zealand 6,70, Greece 6,32, Canada 0,62, Chile, 3,55, Philippines 2,56, Egypt 2,21, Colombia 2,67. As a percentage of GDP, the top ten countries are; Palau 56, Kyrgyzstan 42, Dominica 34, Bhutan 33, Lebanon 31, Curacao 28, Fiji 17, Malawi 17, Maldives 17, Niger 16.
On the other side, the country with the largest surplus is Germany, 263 billion, 5,90% of GDP. The other countries in top twenty are; China, Japan, Netherlands, Singapore, Norway, Switzerland, Iraq, Ireland, Kuwait, Russia, Denmark, Spain, Sweden, Qatar, South Korea, Hong Kong, Saudi Arabia, Vietnam, Israel. As a percentage of GDP, the top ten are; Kuwait, Marshall Islands, Qatar, Iraq, Singapore, Brunei, Trinidad, Djibouti, Norway, Andora.
USA started imposing tariffs on imports from Canada, Mexico, China. These are USA's largest trading partners, in that order. The fourth in line is European Union. That is why Trump said that tariffs for European Union will follow. Canada is the largest trading partner. The difference of the first four largest trading partners is small; Canada 665 bil, Mexico 661 bil, China 655 bil, European Union 632 bil.
Trade deficits are; Canada 50 bil, Mexico 108 bil, China 353 bil, EU 170 bil. Although Canada is the largest trading partner, the trade deficit is the smallest of the four. Still the trade deficit does not show how "unfair" trade is. What determines the "unfairness" of trade is exports/imports ratio which is; Canada 0,860, Mexico 0,718, China 0,299, EU 0,582.
If exports/imports ratio is around 1, exports are roughly equal to imports and trade is fair. So although with Canada it is slightly unfair, it is not as bad as with other countries or Unions. Germany is a much worse case than Canada. Trade deficit is 70 billion and exports/imports ratio is 0,482. USA should have imposed tariffs on (imports from) Germany before Canada. The problem is that Germany is in EU which is a customs union.
USA or any country can't impose tariffs only on (products and services from) Germany. They would have to impose tariffs on all EU imports. Other EU countries that have relatively high trade surpluses with USA are; Ireland 60 bil, Italy 39 bil, France 20 bil. All the rest of the countries will get tariffs because of them. The exports/imports ratios are; Ireland 0,187, Italy 0,356, France 0,597.
Trade with Ireland and Italy is more unfair and with France less, compared to Germany. Perhaps, tariffs will be imposed on goods and services imported from these countries. If it will be a flat rate on all imports from EU, many countries will have to pay the price because of Germany, Ireland, Italy, France. Even if trade is unfair from USA's side, as happens with some EU countries. That is another of the many EU problems.
Trump said that there may be tariffs on imports from UK. This may be a political move, perhaps because Starmer is one of the biggest NWO fanatics. USA has the most fair trade relation with UK. Exports/imports ratio is 1.088 and actually USA had a surplus (in 2021). The most unfair relation, among largest trading partners is with Vietnam (0,108 ratio) and next with Ireland. The most unfair from USA's side is with Hong Kong (7,92 ratio) and then with Australia (2,120 ratio).
Is having trade deficit unfair? Probably it is. First countries need to examine their overall trade deficit or surplus. It is not possible to have exports/imports ratio 1 with all countries. With some they will have deficit while with others they will have a surplus. When their overall trade balance as a percentage of GDP is not very negative, they do not have a problem.
But when they have considerable trade deficit as percentage of GDP, they have a problem and they need to fix it. If they have a trade deficit, they consume more than what they produce or to state it in a better way, they produce less than what they consume. Instead of importing for their consumption needs, they could be producing these.
To make it better understood, suppose that there was no trade, countries were self sufficient. A country would have to produce what it consumes. In the case of USA, the effect of trade is 3% less production. This is produced by other countries, instead of being produced by USA. If USA was producing the goods it needs, its production would be 3% higher.
Their GDP would increase which would increase GDP per capita and in this way they will be richer. So USA could be 3% richer without trade or it can become 3% richer if they fix the trade deficit. This is somewhat simplified but it is the bottom line. Of course countries can not produce everything. But they can export what they produce at an amount approximately equal to what they import.
What is the way to fix the overall trade balance? Fix the largest trade deficits. So Trump is generally moving in the right direction. We have a different opinion regarding the order. We believe that he should have put tariffs on (imports from) Germany and Ireland before Canada. The deficit is higher and the trade relation is more unfair. Total trade volume with a country is insignificant in order to fix deficit. Two numbers are significant, trade deficit and exports/imports ratio.