In this whole discussion about tariffs, President Trump makes it sound like America’s trade deficit is larger than it is. Failing to mention the other exports serves his purpose. But people need to consider the entire picture, not only the partial one that’s designed to win Mr. Trump votes in the Rust Belt.
When looking at the entire picture, a couple of things jump off the canvas at me. First, there are service exports that aren’t included in the picture painted by Mr. Trump. For instance, America exports a tremendous amount of educational services to foreigners, which brings lots and lots of money into the States from those countries. I don’t have the numbers, but they’re huge. And, frankly, they’ve saved jobs at many schools, colleges, and universities, as well as at book publishing companies and other collateral industries. Education is just one example. America exports quite a few other services, too.
Second, American exports trillions and trillions of U.S. Treasury notes and bonds. In fact, China is the largest purchaser of such debt, with Japan also being a major purchaser. The fact of the matter is, someone has to buy them, and if the foreigners didn’t, we’d have to buy them domestically. And consider what that would mean:
- fewer buyers
- higher interest rates
In other words, we’d be paying more and having to save more, too. Savings would come out of current consumption, which means less need for products and services, which in turn means fewer jobs. And higher interest rates would mean higher mortgage expense, fewer cars purchased, etc.
It’s fair to debate trade. And to consider whether a country should protect certain industries, like America has protected farmers for decades (for some reason, Mr. Trump apparently thinks that’s “fair”). But if you’re going to debate it, then at least consider the entire picture.
The lesson here, Vera, is that you’ve got to think for yourself and not allow yourself to be spoon fed by a politician or any other person who has a vested interest in a particular position or outcome. In other words, you just can’t trust people to tell you the whole story.