Quote:
Originally Posted by Clark
I believe that you interpret my lack of discussion on trade policies as a weakness and are pushing that perception to prove a point.
The reality is we have social policies that make our competitive advantage different than Americans. The obvious example is that we have universal health care. That is strong negotiating position when trying to offset Chinas labour cost advantage.
Another is the buying power of our dollar. If American corporations can reduce labour costs because your dollar is worth more than ours then they can offset the purchasing of resources (labour),
You have gone on about tariffs as a response to trade defects. Tariffs are not the only response to a trade imbalance. Reducing corporate taxes, investing in new technology and increasing efficiency, reducing "red tape" in order to respond to a changing marketplace, providing incentives to build new factories, etc. are ways to offset Chinese labour costs.
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This is actually substance and something we can discuss
1) The first major flaw is you're comparing the US to Canada both freely traded currencies. This is not the case with China's currency. They can artificially appreciate or depreciate their currency something both the US and Canada can do at least in the way they do it. That's why it's hard to compete with China overall because if they want to increase exports they can just depreciate their currency. I'll admit I don't understand completely how the Chinese are able to manipulate their currency the way they do, but I do know they have more control with appreciating and depreciating it versus other currencies.
2) I have discussed tariffs but I don't know if I brought up trade deficits. I don't know if that matters though because most the USA's GDP is service based so if I bake you bread and sell it locally, that will increase our GDP but doesn't affect the trade deficit. Like I said, if China has the comparative advantage in manufacturing then why would I want to spend more on XYZ if I'm fine running my bakery. My bakery will still increase GDP but it won't help the trade deficit unless I'm exporting my bread.