So, the fact that the U.S. has been running a combined goods and services trade deficit for much of the last 50 years does not immediately mean America has been hurt by its trading partners. Many economists also agree on the cause of that deficit: American consumers, businesses and governments have been spending more than the economy can produce.
“The productive capacity of the economy can’t meet consumption needs, so you have to import the difference,” said Simon Baptist, global chief economist at the Economist Intelligence Unit in Asia.
That means attempts to alter the U.S.-China bilateral trade balance — through tariffs, or by forcing Beijing to buy more American products — will do little to change the overall economic situation if consumption patterns stay the same, Baptist added.
“It’s possible that you can reduce the Chinese bilateral trade deficit but only by pushing the balloon in a certain way. It’s just going to pop up somewhere else, for example, the Vietnamese or the EU surpluses with the U.S. will increase. So, bilateral can change but not the overall,” he said.
So, many economists say, the way the situation needs to be tackled — if it needs to be addressed at all — is by looking at the way the American economy is consuming and producing, and not by pressuring specific trading partners to buy up more goods.
That’s the argument, anyway, if other countries are giving American products a fair chance to succeed in their own marketplace. Most analysts outside of China do agree, however, that Asia’s largest economy is limiting the success of foreign goods within its borders with artificial and systemic barriers — such as quota systems and steep tariffs.
That’s why many of the same economists and analysts who disagree with Trump’s focus on the trade deficit, still support his overall push to change how China treats international companies.
from News fore today http://bit.ly/2FKnnLs
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