It's Always Easier Blaming Others Than Taking Responsibility

In all the hullabaloo about the across-the-board tariff increases, a number of facts are missing, or, more correctly, Trump is playing fast and loose with the facts. We shouldn't be surprised. Misstatements, exaggerations, or outright lies have been a feature of Trump's ascendency to the Presidency.

Trump was wrong in his insistence that the COVID shots saved 100 million lives. He also misled on the ridiculous chart he put out showing the tariff rates that other countries are charging on American products, which I discussed in a previous post. Many others have pointed out the fallacy of the chart. This article states the following for the European Union:

"The chart lists its tariffs charged for U.S. imports (again, including currency manipulation or trade barriers) as 39%.

How does the White House arrive at 39%? In 2024, the U.S. goods trade deficit with the EU was $235.6 billion. That year, the U.S. imported $605.8 billion worth of goods from the EU. So, $235.6 divided by $605.8 is 38.9%, or, rounded up, 39%."

The actual average EU tariff with the U.S. is 2.7%. In fact, the U.S. and its trading partners have very low tariff rates; some are free trade agreements. So, the idea that others are ripping off America is intellectually dishonest or speaks of paranoia. In that case, Australia should feel it is being ripped off by America because it has a trade deficit of $18 billion with America.

You can target putting tariffs on your enemies engaging in hostile activities, but your friends? The issue of China is fascinating. Does anyone believe that manufacturing will return from China to America anytime soon? It's taken China 25 years to supplant America as the world's leading manufacturer. I believe Niall Ferguson coined the term Chimerica, meaning that China and the U.S. are inextricably linked economically. What do you think would happen if China suddenly collapsed? Imports into the U.S. would crash, there would be supply shortages everywhere, and for America to replace Chinese-based goods would take a long time. Of course, the costs would greatly escalate because no American would work for the wages in places like China or Vietnam.

Blaming others is easy, but why is the West importing so many goods from China? Firstly, because of so-called Climate Change, the political class wants clean air and water, including changing to electric vehicles on the assumption that they are clean. This is also at play in a country like Australia. It's also an illusion. This was exemplified by a Channel 7 News special on EVs. It spoke to the Chinese demand for nickel for EV batteries, which is mined in Indonesia. The pollution is horrendous, and with unsafe work practices, workers have been killed. While in Australia, we are so proud of reducing emissions, all we have done is ship them offshore, where China produces the vehicles we want. We have a trade deficit with China, but it and its allies suffer the environmental consequences.

I have three neighbours who have EVs. One has a Tesla built in China, and the other two are Byd's, which were also built in China. The company also makes the batteries that go into Teslas. One of my neighbours told me that one of the reasons he bought the Byd was for its quality. He owns Audis and BMWs, and he says his EV has superior quality to those along with the Tesla. So this leads me to the second reason for the great trade imbalance with China.

We want the 'things' we are accustomed to in this age of technology. We want cheap smartphones, iPads, computerized notebooks, and large, big-screen TVs to stream content from anywhere. We also want kitchen appliances with their gadgets, many of which have computers, and these are all within the average person's reach.

I remember buying my first large TV, a plasma screen system, back in the early 2000s. It cost $15,000. Today, you can buy the same size TV that does so much more and has more excellent screen resolution for $1000. So unless people are willing to forgo those 'things' we have become accustomed to, nothing much will change. Only slowly can America start producing more of the essential products it needs for national security.

The number of countries with which the United States had a goods trade deficit in 2024 was 92, while the surplus was 111. This map shows trade deficits (in red) versus trade surpluses (in green).

In a fantasy world, there would be zero trade imbalances. However, in the real world, some countries provide more of a product than another country wants. This will vary from country to country. If one country lacks a certain mineral resource, does it stop importing from another country because it will cause a trade deficit?

Is bullying other countries to your will based on a false premise the way to go? Is America really going to produce the products that China or Vietnam now produce at a price point that people can afford? Are people willing to pay $50 for a T-shirt that now costs $15?

The real problem for America is not the trade deficit; the national debt is moving America towards bankruptcy. This has been accelerating since the Obama administration, and Trump continued the trend with more than $8 trillion in addition to the debt. Some of that was due to COVID relief, but that was an unnecessary usage of money, as pointed out by many. There is no sign of relief in the debt accumulation. Continuous money printing, lack of responsible fiscal policies and the burgeoning Medicare and Medicaid entitlements are significantly straining the U.S. budget. Balancing the budget is not on anyone's lips. All this adds to interest on the debt, which leads to more debt.

The debt to GDP ratio is getting into dangerous territory. By 2050 it is projected to hit 150%.

So Trump could have imposed selective tariffs on countries like China, perhaps not Vietnam, because they are aligned with the U.S. If Trump keeps pushing and bullying, he may just drive others, including friendly nations, closer to China. In Canada, the animosity towards the U.S. could likely elect the left-wing Prime Minister, Carney. This is what Carney stated:

"The old relationship we had with the United States, based on deepening integration of our economies and tight security and military cooperation, is over,"

A few weeks before Trump started this anti-Canada tirade, Carney was way down in the polls. Across-the-board tariffs could devastate economies by driving up costs. Carney has alluded to closer ties to China. That is no surprise. Trump is undoubtedly losing support in Australia as well.

America needs to stop blaming others and playing the victim card. It should own the problem of the debt and push Congress to start working towards balanced budgets and debt reduction.