So why not free trade? I hate the idea of tariffs, but when your "allies" have had non reciprocal tariffs something needs to be done. I think all of this would go away if all tariffs against US products were removed
For example US farm subsidies are significant and supply management is common in many areas, but the rhetoric around Canadian dairy supply management recently has been amplified far beyond even it's wildest possible impact. And this with a country with extraordinarily balanced trade, if anything probably a deficit. The history of trade between the two countries is littered with spats about US protecting this, Canada protecting that, but on the whole very balanced. Pretending otherwise may make for good politics (i guess that remains to be seen) but it isn't based on evidence or good policy work.
Of course there are huge problems with this -- what happens if whomever makes your food goes tits up, involuntarily (natural disasters, coups, ...) or voluntarily (maliciously attacking)? Who guarantees the system? How? Etc... --, if there weren't I wouldn't call it utopia. But I think raising the costs of war beyond the unreasonable is a net gain.
Note: I'm fully aware that this is an extremist and probably next to impossible position, no one has to remind me that. I just contest the fact that the objection "but then we could not go around and kill people" isn't a particularly good counter-argument for no trade barriers.
There are no tariffs on food, steel or similar between the member states. All states subsidise food production, but not steel.
The EU is a really good example here of how a single currency puts everyone on the same economic accounting basis and so eliminates the ability of a country to 'fudge' the numbers through either internal subsidies or currency manipulation.
The reason you need a single currency is that if you're going to sell barrels of wheat from country X to country Y, and country Y buys televisions from country X. How many units of currency is a television worth relative to a barrel of wheat? If those values are tied to the same currency, then the economic incentive to grow wheat or build televisions will be on the same footing.
A tariff is a way to adjust this economic cost externally which takes it out of the market's hands and put it into a political realm and one step removed from the actual economy that should be adjusting.
In a single-currency market, it is the responsibility of strong players to shore up the economies of weak players, or risk popular discontent in the weaker economy and the democratic dissolution of the common currency. German politicians have paid lip service to this but have not really put German resources to use in building up the PIGS economies because such a policy is unpopular with the German voting public, which wants to see those resources stay in Germany and to the nearsighted benefit of German taxpayers. This is the real root of the Euro crisis. There were always going to be weaker players in the EU, and it doesn't matter if it's Greece, it could very easily have been some other country. The question is what do stronger players do.
The US doesn't suffer from this issue because, to use an oversimplified example, California voters aren't discontent with FEMA funds used in hurricane disaster recovery areas. Californians are Americans before they're Californians, by and large.
This is true, however there were quite strict criteria (the Maastricht criteria) put in place to try and prevent this from being too bigger problem. In hindsight, those criteria weren't sufficient, in one way or another.
I believe it's correct to say those weaker economies benefited from adopting the Euro the short term, and that they wanted to join the Euro.
As a twist, the Euro was somewhat unpopular in Germany when it was introduced, because it made things more expensive. So there is a feeling that Germany "paid" the price of adopting the Euro - whether this is true or not is irrelevant for the sake of policy-making.
In general, freely floating currencies fix all problems you mention.
Tariffs and currency manipulation are a sovereign response to prevent efficient markets that would render local labor noncompetitive.
And as I mentioned earlier, a single currency makes such manipulations ineffective and you get Greece. They can't bring their productivity up to the level of Germany or France and their economy suffers for it because all of the capital goes elsewhere.
If you mean you'd like to see the US and those countries both drop tariffs and protections, I can see you argument - but that's the opposite of the direction things are going today so I don't see the relevance. Even if it were not, it's hard to argue against a countries legitimate security concerns in some areas, although clearly that argument can be abused (again, cf current rhetoric).
You need look no further than the USA's gaping trade deficits.
These numbers include items made in China, by Chinese jobs, using Chinese components, under a US company name. It uses total sales, and not net revenue, which would change the picture by a great deal.
I'm confused. What do you mean by that?
jeromegv said there was no trade deficit with Canada, so I assumed good faith and responded to him/her under the pretense that they were referring to the "aggregate sales surplus" figure that has been in the news recently.
Can you please help me understand how I have ignored facts and acted in bad faith? I would like to fix this problem, but I do not understand where to begin.
It seems that US and Canada trade is globally balanced.
How would Canada like to run a $800 billion trade deficit with the US over the next 17 years? You know, just to make things fair over time. Didn't think so.
On the upside, the trade deficit has narrowed from a common $30 billion five years ago, to more like $10 to $15 billion. That's a pretty happy result if you're the US, given it's a consumption engine (lower domestic savings at the median, higher consumption rate, which pushes up demand for imports in most cases).
What is generally accepted though, is that internationally speaking the US and Canada are one of the most balanced know of, over long periods, and for major trading partners.
Pretending otherwise is just serving partisan politics at this point.
A “trade deficit” is just another name for a capital inflow surplus.
If you want a smaller trade deficit, reduce the degree to which you systematically favor capital.
Of course, what policymakers usually justify based on a trade deficit is increased support for domestically headquartered firms and other supports for capital invested in the country, which results in more net foreign investment and higher trade deficit, which is used to support more capital-serving policy, which results in more capital inflows, etc.
Every country involved has industries which won't allow this. For example, all the countries in the G8 have agricultural sectors which will not allow elimination of trade barriers.
So, even if you want "free trade," you start with each country's list of stuff where there is not going to be free trade, and move forward from there.
The only time the president mentioned lower tariffs was an offhand comment at the G7. All of his other positions imply he disagrees with you and thinks trade is bad.
Intellectual property rights/copyright laws, both linchpins of US policy, are the very definition of government intervention.
The US aerospace and manufacturing industry is overwhelmingly subsidized by the military complex, a lot of it done under the auspices of "national security". For the US to complain about Airbus or Bombardier is simply incredible.
US agriculture is outrageously subsidized. I'll go into a specific example in a moment, but the notion that that the US is trying to play fair is simply incredible.
The US loses at the US-created WTO time and time again (see: Canadian softwood) and simply ignores the rulings.
"but when your "allies" have had non reciprocal tariffs"
I don't know what example you're thinking of, but let's consider the case of Canada (a country that the US has a trade surplus with). Canada has supply management for dairy to ensure a supply that matches demand to ensure food security. To protect this, Canada applies a high tariff for imports above the quota.
"So unfair to US farmers!" yells Trump.
Only here's the problem with his ignorant, easily swayed vision.
Canada exports less dairy to the US than vice versa. Like, 1/2 as much. The whole point of supply management is that it doesn't generate an excess, and for that small industry the exports and imports are generally only for very specialized things.
US dairy, in contrast, is hugely subsidized. To the tune of 74% of US dairy income comes, directly and indirectly, from the US government (0% in Canada comes from the government). Hence US farmers grossly overproduce and then look to dump it elsewhere, destroying production elsewhere. Just as US corn production is essentially a government enterprise, flooding the world with corn by-products and HFCSs.
Who is the villain here? Trump can rattle off some scary number to his clueless fans (I'd steer clear of the pejoratives, but given that Trump is a lifetime grifter and con man, whose virtually every statement is an outrageous lie, it is incredible that someone can be called his fan), but Canada has nothing at all, whatsoever, to do with those poor American farmers. It certainly isn't Canadian milk on American shelves causing their ills, because Canadian milk isn't on their shelves.
Nor did China cause the US poor to live in such dire straights. This is just the latest example of the US becoming more and more polarized, while convincing the poorest that it's always some external reason why they live in destitution in the richest nation on Earth.
Yeah, corn. That's why everything is HFCS heavy in the US. And I do mean everything.
Things that didn't need to have so much sugar like bread, ketchup, other sauces, soup, etc.
It's easier to get it than to avoid it.
And american's health suffer for it.