It seems that Trump is being
accused of making irrational decisions, again. Levy states that Trump wasn’t
taking all matters into consideration when he made this deal, that this deal
was too narrow sighted. Trump has made an attempt at reducing the US-China
trade deficit by selling “$250bn of additional goods and services to China.”
Yet, Levy raises the issue of world trade deficits rising; unfortunately, Trump’s
deal only addresses part of the US trade deficit, it merely scratches the
surface. Levy raises the point that the trade deficit is a multilateral issue
being taken on bilaterally. Although, Trump isn’t necessarily fixing the
problem as a whole, which is most likely impossible to do all at once, he is at
least staying true to what he said he was going to do while he was running for
president. Trump said he would lower the US deficit and at least he is not
doing nothing.
I agree that he is at least trying to fix the trade deficit. Although I believe that the way he is approaching the issue might not be the best. China as of now is buying treasury’s to keep interest rates low, without this the United States could go into another recession. One way that would help lower the trade deficit would be to have Americans save more or invest less. Another way to reduce the trade deficit would be to lower the U.S. export prices and raise the import prices. This would be done by lowering the amount of goods available to U.S. consumers and make these goods more attractive to foreign buyers. This solution would take a while to fix the trade deficit but would end up fixing it and would be better than the short term solution that Trump has put in place.
ReplyDeleteTo a great extent I agree with the article and indeed the trumps decision of reducing trade deficits. It is crucial for US to maintain its FOREX reserve making sure their is a surplus in trading. Though short term trade deficit is not a big issue, however, trade deficit on the bases of long term is clearly a matter of concern. if local firms are not competitive in the market than soon US economy will become dependent on trade.
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