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What Does It Mean For Trump To Win The Trade War?

Posted July 09, 2018

Under Economic Issues, International Trade Issues

(Yuwa Hedrick-Wong – Forbes)

U.S. President Donald Trump has just fired a new salvo against America’s main trading partner by increasing tariffs on $34 billion of imports from China, a move that marks a significant escalation of the trade war between the world’s two largest economies. Regardless of who fires the next shot, it is important to understand better what it is that Trump intends to win in this escalating conflict. What does victory look like for Trump?

Needless to say, its impossible to know what Trump really thinks. We can only guess. Here are my two best guesses, the first is based on taking his various tweets and statements at face value. The second is based on taking seriously the arguments of two of his closest economic advisers, Peter Navarro and Wilbur Ross, assuming that they do shape how Trump thinks about trade, and more importantly, what it means to win a trade war.

On the first, Trump believes that a trade deficit is bad, and a trade surplus is good. The fact that America runs a chronic trade deficit means that the way international trade is conducted today is bad for America. The current system of international trade is somehow biased against the U.S., and America’s trading partners are running trade surpluses against the U.S. because they are not playing fair. Trump is fighting a trade war to eliminate America’s trade deficit. Click here to read more.