Could there be anything more derptarded than Trumponomics? I knew the tariffs were coming and predicted eventual economic doom. But I didn’t expect they would be this stupid. Starting a trade war with China and Mexico was expected. But Canada and Europe? The policy is stupid enough, but so-called “problem” it seeks to solve shows Trump is over 9,000 on the derp scale.

Derptastic Solution

Trade deficit is over nine thousand!

Derp level: godlike.

Take steel tariffs. The idea is that American steel can’t compete with cheaper foreign steel, and equalizing them is somehow a good thing. There are two ways Trump could have equalized steel: subsidies or tariffs.

Had he used a subsidy to cut over 20% off the price then it could have competed globally, with the US exporting steel all over the world, putting Chinese steel out of business, and reducing the cost of steel for American industries that use it: cars, appliances, canning, etc. Subsidies have other problems, but let’s just compare it to the tariff for now to see which is stupider.

Instead he chose the tariff: adding 25% to all foreign steel imports. Any moron can see that this harms the domestic industries that consume steel. But there is deeper level stupidity: American steel still costs 20% more than foreign steel, meaning American steel still can’t compete with China in any country outside the USA. All Trump did was force American manufactures to pay more for American steel while the rest of the world continues to buy cheap Chinese steel. You need to be dumber than 10-year-old not to understand the math behind that.

Finally, there is the entirely predictable response of tariffs from foreign countries. It’s worth noting that these retaliatory tariffs only apply to American exports. So while Americans are saddled with expensive imports no matter what the source and American exports like bourbon are punished across the globe, countries like Canada and Europe can still export and import cheap goods to and from every country not called America.

How can any sane person believe that benefits Americans?

WTF Is the Problem?

Bernie Sanders: I can economic to potato

OK, there is something dumber.

Trump time and again has made it clear that the trade deficit is the “problem” he seeks to solve. This is when America sends more dollars to other countries than it gets back via trade.

Imaginary Trade Deficits

This may seem a bit confusing since he’s waged a trade war with Canada despite the US having a trade surplus with them, but Trump voters can be forgiven since Trump lied about it.

When Trump complains about deficits, he only counts physical goods. He doesn’t count services like health care, tourism, and technology. That’s right: when Google and Facebook bring home billions of revenue from other countries, Trump doesn’t count that as an “export” and then bitches that other countries have the upper hand. (This fuzzy math is how he turns the surplus with Canada into a deficit.)

Seems like the president who doesn’t trust computers and is afraid of using e-mail would rather see Americans building “valuable” iPhones in factories and see China producing all of Silicon Valley’s “worthless” technical engineering and software services to run them, an economy erected not on our minds and American inventive creativity but on low skill manual labor.

Trade Deficit: Not a Problem

Donald Trump: I don't always start trade wars, but when i do, it's with a country that supplies one third of America's food.

Damned Mexicans giving us affordable food!

If dollars were so important to horde, why do you give them all to Walmart and Amazon? You have a massive trade deficit with these companies: they take far more money from you than they give to you! How’s that bad for you? Would you rather have a trade surplus where instead you sold all your stuff to Walmart until all you had was a pile of cash and nothing to eat?

The complaint about trade deficits doesn’t make sense, because eventually the US would run out of dollars if that were the whole picture. That should be a clue it isn’t.

What trade doesn’t count is capital. When foreigners offer to lend money to American businesses, driving down their interest rates, when Honda spends money building factories in Ohio to create American jobs, when overseas millionaires give money to American start-ups to grow their businesses, those inflows don’t count as “trade.” In fact, the only way to have a trade deficit is to have a capital investment surplus to make up the difference. And vice versa: the only way to have a trade surplus is to have a capital investment deficit.

Donald Trump: And to jumpstart our struggling economy we'll start a trade war with China, Japan, Central America, and OPEC!

…and Europe, Mexico, Canada…

Capital investment goes to economies that have the greatest potential to create wealth. America doesn’t have a trade deficit because other countries screw us over. America has a trade deficit because our economy is the strongest in the world that attracts so much capital investment in our future growth.

I get that understanding trade vs. capital investment is above the heads of most people, especially Trump voters. But even if you don’t understand that then it should be obvious that there’s something wrong with Trump’s claim that sending dollars overseas is bad: when foreigners find themselves sitting on a pile of US dollars, what the fuck are they supposed to do with them? Eat them? No, they send them back to America, either to buy stuff or invest in stuff.

And even if you can’t figure that out, the US has had a trade deficit since 1975. Is the US less prosperous today than the Jimmy Carter 1970s? Obviously not. In fact, despite (or perhaps because of) the trade deficit, the US economy grew faster than its major trading partners. Sounds to me like the US got the better end of the deal!

A More Effective “Solution”

Donald Trump: can't be a trade deficit if there is no trade

Trumponomics in a nutshell.

If the trade deficit is as bad as Trump says it is, here is a more effective “solution”: a recession. A trade deficit or surplus is not caused by trade agreements. It’s caused by foreigners wanting (or not wanting) to invest in America’s future.

Thus the most effective way to wipe out the deficit is to make America a worthless place to invest: make the future uncertain for business, dry up credit and let mortgage rates soar into deep double digits, inhibit wealth creation through more taxation and minimum wage hikes, etc. You know, the Bernie Sanders economic plan.

Trump’s tariffs are a small step in that direction. Harley-Davidson is moving operations overseas. The company blames the EU’s tariffs on American motorbikes, which we can blame on Trump since that was completely predictable EU response. This is probably a pretext, given that even before this tariff they had begun moving jobs from Kansas to Thailand. After all, the Trump steel tariff makes it more expensive to build a Harley in the US to sell overseas. It’s worth noting that a Harley built in Thailand will pay for neither Trump’s steel tariff nor Europe’s American motorcycle tariff.

Harley will invest capital in Thailand’s future economic growth, and that will indeed reduce the trade deficit. But if Trump wants to really make a dent in the deficit, he needs to do a lot more damage than that.

Trump with South Park character. President Trump hires a new spokesman to pitch his tariff idea. "They took 'er jobs!"

Trump voters actually believe this crap!