Trade Deficit

Discussion in 'Economy' started by shoooot9, Mar 14, 2006.

  1. Supposn
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    Supposn VIP Member

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    Expat_Panama, your formula can only account for what's been produced, rather than what, due to the nation's trade deficit, it has failed to produce. If we would further increase our imports and we continue (due to our chronic great annual trade deficits), to domestically produce less than otherwise, would you consider that to be to our further advantage?

    These are some reasons why trade deficits are always net detrimental to their nation's volumes of domestic production and drag upon their numbers of jobs:

    the amounts of nations' net trade balances effects upon their GDPs to some extents understate, (never overstate) their ACTUAL effects upon their nation's domestic production which is reflected by the GDP amount. ...
    ...
    Trade balance's economic importance.
    Annual trade deficits indicate the nation has consumed more products than it has produced. That occurs when imports have “crowded out” the nation's domestic products from the marketplaces. The amount of a nation's net trade balance can only account for the prices of globally traded products effects upon their nations' GDP, but the products' prices do not reflect all of the commercial activity their production has generated.

    There are enterprises in industries that we would suppose our unrelated, but they generate commercial activity between them. (e.g. a coffee shop or a pizza parlor near a producer of goods, or a cartoonist that that provides content for that producer's in-house posters or company bulletins are two of many examples. All production supporting or other commercial activity induced by production, are not reflected within the prices of those products. Of course all domestic commercial production activity contributes to their nation's GDP but if it's not reflected within the prices of globally traded products, we cannot account for the ALL of global trades' net effects upon domestic production due to the nation's net balance of international trade; but it's always to a greater extent than the net balance itself.

    Governments often locate or modify or build public infrastructures more favorable to their jurisdictions' larger producers. Similarly, professional well-qualified advice, opinions, research, and development studies are some examples of production supporting goods and services that may be provided by governments, universities, and other organizations on much lesser than market or at no cost. They mutually benefit from promoting their national or local economies.

    These are costs that contribute to their nations' domestic production, but are not fully paid for by the favored producers, and are not reflected in those producers' prices. To the extent that prices of globally traded goods are understated, they understate international trades' effects upon their nation's domestic production.
    ////////////////////////////////////////////////////////////////////

    Economies of scale are more conspicuous in manufacturing, but they occur to some extent in almost all industries.
    The lesser cost per unit of production is less available to U.S. steel producers because they have a smaller potential home market of USA enterprises purchasing steel. USA has lesser steel purchasers due to lower-priced imports made with steel.

    Foreign low-wage producers of cheaper steel sell to customers both within and beyond their nation's borders. Thus, due to economies of scale, they further reduce the per unit costs of their cheaper priced steel.

    [This is the reason that levying tariffs on steel, but not on products containing steel is illogical. We're increasing costs to USA purchasers of steel while their products must still compete with foreign imports. Thus, we're reducing the competitive position of USA steel purchasers and contributing to those enterprises' demise.

    I also believe that it's illogical to discriminate among nations we import from. I believe in the concept of most favored nation. We should treat imports from all nations in an equitable manner and we should (if possible), retaliate against any nation that treats USA products with less favor than the products they import from any other nation. We should do the same when dealing with a pact of nations such as the European Common Market.]

    Economies of scale indirectly contribute to the producing nations GDP by enabling them to increase their production and/or the quality of their production at lesser cost.
    ///////////////////////////////////////////////////////////////////////

    We know that an enterprise's additional commercial activity can “resonate” with other seemingly less related enterprises and consequentially increase their nation's domestic production. An enterprise's production for export can, and often is such an additional commercial activity; we know international trade balances usually understate their nations net balances effects upon their nation's annual domestic production; We know that trade surplus nations' domestic productions are increased, and trade deficit nations' productions are reduced due to their annual net balances of trade; We know domestic production supports domestic employment.

    Beyond the economic benefits of increasing their nations commercial activity and numbers of jobs, increasing domestic production often provides social, technical, and military benefits to their nation.

    by producing, we gain familiarity, practice, and knowledge of the tools and materials we handle. So much of our economies' progress was due to research and development induced by USA's defense purchases. If our military has need for something fast, will it be delayed because a foreign government doesn't agree with our then current policy? What of military security for foreign produced equipment? ...

    Respectfully, Supposn
     
  2. Supposn
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    Supposn VIP Member

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    Expat_Panama, the shorter response to your post is although we're unable to determine or estimate due to USA's annual trade deficits, the net extents of domestic production we failed to achieve, we certainly do know that trade deficits are net detrimental to their nation's domestic production.

    We do know that an enterprise's additional commercial activity can, and often do “resonate” with other seemingly less related enterprises and consequentially increase their nation's domestic production; we do know enterprise's production for export are often such an additional commercial activity.
    Thus, we logically conclude international trade balances usually understate, and never overstate their nations net balances effects upon their nation's annual domestic production; trade surplus nations' domestic productions are increased, and trade deficit nations' productions are reduced due to their annual net balances of trade.

    Furthermore, because we know domestic production supports domestic employment and we've concluded trade deficits are net detrimental to their nation's domestic production, we logically conclude that those deficits are also to some extent detrimental to their nation's numbers of jobs.

    Respectfully, Supposn
     
    Last edited: Jul 18, 2018
  3. expat_panama
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    expat_panama Gold Member

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    Correct me if I'm misunderstanding you but what I'm getting is trade deficits are always a failure of some domestic production. If that's what not what you're saying then please clarify.

    If it is then lets consider the $billions of trade deficit that the U.S. has w/ say, Nigeria. That trade deficit is caused by importing cocoa beans for U.S. chocolate factories like Hersheys and Mars. There's no domestic production failure as cocoa beans don't grow in the U.S.

    This line of thinking is easy to ignore at maybe a union hall or a political rally, but when it comes to earning a living it's time to sober up and look at how hard numbers for GDP soar when the trade deficit grows.
     
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  4. Supposn
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    Supposn VIP Member

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    Expat_Panama, yes, you certainly are not “getting it”.

    if you'll explain how from my posts, you derived their meaning to be “trade deficits are always a failure of some domestic production”, I might better understand many of the other less than logical conclusions expressed within your posts.

    I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

    I stated USA’s chronic annual trade deficits indicate we're purchasing more products than we’re producing. If you derive that to mean that Hersey is purchasing more products than they’re producing, you would again be incorrect.

    Respectfully, Supposn
     
  5. expat_panama
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    expat_panama Gold Member

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    --and that's about as far as any of these chats go; we start talking econ/money and then folks who suddenly realize that they're running on empty quickly change the subject to which one is the bad guy.

    cheers.
     
  6. waltky
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    waltky Wise ol' monkey Supporting Member

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    Trade Deficit With China Hits New Record...
    [​IMG]
    $185,721,300,000: Trade Deficit With China Hits New Record Through June

    August 3, 2018 - The U.S. merchandise trade deficit with China set a record through June, hitting $185,721,300,000 for the first six months of 2018, according to data released today by the Census Bureau.
     
  7. Supposn
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    Supposn VIP Member

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    [​IMG]
    [/quote]
    [/QUOTE]
     
  8. Supposn
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    Waltky, we agree; USA's chronic annual global and our Chinese trade deficits are huge. What's your point? Respectfully, Supposn
     
  9. waltky
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    waltky Wise ol' monkey Supporting Member

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    China still eatin' our lunch...
    [​IMG]
    China's U.S. trade surplus hit record high in August
    Sept. 8, 2018
    -- China's trade surplus with the United States hit a new record in August as President Donald Trump threatened to impose tariffs on virtually all Chinese goods.

     
  10. frigidweirdo
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    frigidweirdo Platinum Member

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    The US has been screwing countries over for a long, long time. You complain that someone's taking what you took.
     
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