[Atlantis]

[Atlantis]

Donald, I'm asking you one last time what did you do with the desert that was in the fridge? Donald, look me in the eyes! I'M ASKING FOR THE VERY LAST TIME! WHERE IS THE TIRAMISU FOR THE GUESTS?

[Albert]

^
Is that a real picture from the summit?

Trump makes stunning reversal, says there should be 'no tariffs, no barriers' at G7 summit weeks after imposing huge tariffs on US allies

President Donald Trump suggested to the G7 leaders that the world should eliminate all tariffs, trade barriers, and subsides in order to promote free trade.
The idea comes weeks after Trump imposed huge tariffs of steel and aluminium imports from the European Union, Canada, and Mexico.
The suggestion took the G7 leaders aback, reports said.
While Trump seemed to reverse course, the president also kept up his complaints about trade deficits.
President Donald Trump suggested a radical change to the international trading system in an apparent reversal of his recent tariff policy.

During a press conference at the G7 summit in Quebec, Canada, Trump said that he suggested that all tariffs, trade barriers, and industrial subsidies should be dropped in order to facilitate free trade.

"No tariffs, no barriers, that's the way it should be," Trump said. "And no subsides, I even said not tariffs."

The statement comes just a few weeks after Trump decided to impose large tariffs on steel and aluminium imports from the European Union, Canada, and Mexico and a few months after Trump hit the rest of the world with the same tariffs.

According to multiple reports, Trump brought up the idea of totally free trade during a meeting with the other G7 leaders which include the heads of Canada, France, Germany, Italy, Japan, the UK, and representative for the EU.

"Ultimately that's what you want, you want tariff free, no barriers, and you want no subsides because you have some countries subsidizing industries and that's not fair," Trump said. "So you go tariff free, you go barrier free, you go subsidy free, that's the way you learned at the Wharton School of Finance."

According to reports, the other leaders were taken aback by the suggestions and not sure how serious Trump was about it. The president alluded to the surprise during the press conference.

"People were ... I guess they gotta go back to drawing board and check it out," Trump said.

Larry Kudlow, the president's top economic adviser and a staunch advocate of free trade, said the suggestion of no tariffs led to productive discussions with the other world leaders.

"I don't know if they were surprised with President Trump's free trade proclamation, but they certainly listened to it and we had lengthy discussions about that," Kudlow said at the press conference. "As the president said, reduce these barriers, in fact go to zero, zero tariffs, zero non-tariff barriers, zero subsidies, and along the way we're going to have to clean up the international trading system."

But Trump did not totally change course, adding that the current tariffs were necessary as a reciprocal action in response to various barriers erected by other nations.

"We can't have an example where we're paying, the United States is paying, 270% — just can't have it — and when they send things into us you don't have that," Trump said at the press conference.

During the meeting with leaders Trump also aired grievances about trade, using charts to discuss the US's trade deficit with various G7 members. Canadian Prime Minister Justin Trudeau and French President Emmanuel strongly pushed back on these attacks, per reports.

Is Trump a libertarian? Perhaps he is strictly looking at it form a business perspective.

This is actually a globalist view of things. Oh lord.

[Atlantis]

This is actually a globalist view of things. Oh lord.

I don't believe that anything Trump says has any meaning. He'll say one thing today and the opposite tomorrow.

After agreeing to the summit declaration, he got on his plane to Singapore to fire off a couple of tweets accusing Trudeau of lying and rejecting the summit declaration.

But the show must go on. Much better to sit back and enjoy the next round:



He probably has more in common with Kim than with the G7.

[Kaiserschmarrn]

I think whether trade imbalances are bad in the long run is a rather complex question that has to be answered on a case by case basis. In case of the US there seem to be many economists who believe the trade deficit is no problem. Like this one:

https://voxeu.org/article/external-debt ... oncern-yet

He argues that the negative NIIP (net international investment position) is not an issue since the net investment income is still positive, meaning the US earns a higher return on its foreign assets than foreigners earn on US assets. I don't think that's very assuring. If the US dollar loses its reputation as a safe-haven, foreign investors might not be satisfied with the lower return anymore. A sudden stop of capital inflow would lead to painful macroeconomic adjustments.

Thanks. Assuming that more balanced trade is desirable, it seems to me that this is difficult to do if only one side makes adjustments, as the other side might react in order to keep its surplus. I'm thinking about Germany where the trade surplus has a somewhat mystical status and where I suspect there would be strong domestic pressure to keep the status quo.

That said, as far as I'm concerned, criticism and corrective policy obviously should start at home for the deficit countries, and the Anglos in particular.

[One Degree]

Free trade guarantees the continuation of poor countries and rich countries. Workers making $.50 an hour competing with those making $15 an hour guarantees production moves to the lowest paid and their brightest move to the highest paid. A globalist dream of a small elite serviced by a world of poor who don’t even live near them. The only disagreement in the West seems to be which country gets to be the final haven for the elite.

[Negotiator]

I'm sorry, but what exactly are we seeing there ?

Is this simply the NUMBER of trade regulations ?

If thats true - how is the mere number of ANY consequence ?

For example when Trump first announced he wanted to put tariff on steel and aluminium, Europe said they wanted to put tariff on like a half douzen of products. I only remember peanut butter, but the other products have been of compareable status. Basically no european would care because we just dont eat peanut butter in the first place.

So according to your statistics we would have been worse than Trump even if Trump put tariff on something of high consequence while all Europe could come up with would have been products nobody gives a damn about in the first place.

IMHO the mere count of regulations really says nothing. For example I could just state okay I put a tariff of 50% on everything and have no further rule and in your statistic the country in question would look exemplary.

[Atlantis]

True, the mere count of protectionist measures doesn't give us a numerical value in terms of Euros and cents of what trade volume these measures represent. If such a calculation does exist, I haven't seen it.

What this chart does give us, however, is a refutation of the myth that the US doesn't use protectionist measures. In fact the US uses more protectionist measures than any other countries. The full scale of these measures will never be known since diplomatic pressure exercised by the US state department on other countries to open their domestic markets to US goods and services mostly happens under the cloak of secrecy.

Why am I not surprised that the lunatic fringe of the European far-left is falling in line behind the Donald? I don't know if it is because they will always support autocratic government, no matter of which political affiliation, or if it is because they hate Europe that much.

[Rugoz]

Thanks. Assuming that more balanced trade is desirable, it seems to me that this is difficult to do if only one side makes adjustments, as the other side might react in order to keep its surplus. I'm thinking about Germany where the trade surplus has a somewhat mystical status and where I suspect there would be strong domestic pressure to keep the status quo.

That said, as far as I'm concerned, criticism and corrective policy obviously should start at home for the deficit countries, and the Anglos in particular.

I doubt surplus countries would react to measures aimed at the trade deficit. E.g. an increase of the US saving rate, a tax on capital inflows or across the board non-discriminatory tariffs. The latter two are arguably compatible with WTO rules, which in principle allow for import restrictions for balance-of-payment reasons.

[Atlantis]

The EU’s own figures give a much simpler view and clearly show the huge imbalance with the US. They even show these statements about the US having a big advantage in service trade is a lie.

No they don't. The US benefits enormously from international trade through the earnings of its multinationals. That’s why the wealth of the world accumulates in Wall Street.

The US$1.4 trillion 'surplus' that Trump's not talking about

The U.S. has a surplus of US$20 billion with China and US$1.4 trillion with the rest of the world.

That’s not a normal trade balance, of course, where the U.S. registered an annual deficit of more than US$330 billion with China and about US$550 billion with the world last year, but an "aggregate sales surplus" which measures both direct trade and the sales of multinational companies, according to research by Deutsche Bank AG.

Just looking at the goods and services trade deficit is misleading and doesn’t capture the true size of U.S. business interests, according to Deutsche Bank economists. While trade and corporate data aren’t usually combined, if you add up all trade data, sales by U.S. companies in foreign countries and foreign firms in the U.S., "U.S. companies have sold more to the rest of the world than other countries have sold to the U.S. in the past ten years," Zhang writes.

President Donald Trump’s determination to rein in his nation’s trade deficit has put him at odds with the developed world, a stance that undermined an acrimonious G7 summit in Canada at the weekend. China and the U.S. are meanwhile locked in negotiations to stave off a trade war, with Trump threatening to slap tariffs on at least US$50 billion in Chinese imports after June 15.



For China, the image of a massive trade deficit with the U.S. "is at odds with the fact that Chinese consumers own more iPhones and buy more General Motors cars than U.S. consumers," wrote Chief China Economist Zhang Zhiwei in the report. "These cars and phones are sold to China not through U.S. exports but through Chinese subsidiaries of multinational enterprises."

Instead of a growing trade deficit with China, Deutsche Bank estimates there was a small but growing surplus. The increase reflected rising demand of Chinese households for foreign goods and services, driven partly by the wealth effect of China’s property boom. The sales surplus with China may exceed US$100 billion by 2020 if the world’s two biggest economies avoid a trade war, Zhang estimates.

The U.S. also ran sales surpluses with nations including Mexico and Canada but had deficits with Japan and Germany last year, Zhang wrote.

A trade war risks the success of U.S. multinational companies, which account for a fifth of employment in America, Zhang wrote. The U.S. unemployment rate is lower than its major trading partners to some extent because of the success of U.S. multinationals, whose businesses overseas boost the American economy, he wrote.

Deutsche Bank used data from the U.S. Bureau of Economic Analysis to estimate overseas sales of U.S. companies through 2015. For more recent sales it turned to multinational companies in the Standard and Poor’s 500 Index that provide sales reports broken down by country and used those to estimate overall sales by American companies in 2016 and 2017.

If Trump wants to play hardball, that's fine with me. The rest of the world will reply by punishing US companies abroad. We will all suffer from the global recession Trump will bring onto the world with his protectionist agenda, but if that's a price we have to pay to get rid of the Yankee imperialists, so be it. Rather short and painful than never-ending pain.

PS: The "fifth of the US economy" which depends on the US's multinational operations abroad is also the most competitive and profitable section of the US economy. These are high tech companies that pay high wages and guarantee the US's high living standard. Trump's real estate would be worth a lot less without them even if in his Mafia-style business experience that fact doesn't register.

[Atlantis]

Merkel Calls Out Trump,
Citing U.S. Services Surplus With Europe

Chancellor Angela Merkel said the U.S. runs a trade surplus with Europe when services are included, marshaling a rebuff to President Donald Trump’s sustained criticism of German exports.

In a speech in Berlin, Merkel said the topic was discussed at last week’s tumultuous Group of Seven summit, where a U.S.-Canadian trade dispute caused Trump to renege on his support for the leaders’ concluding statement.

“Trade surpluses are still calculated in a pretty old-fashioned way, based only on goods,” Merkel told a business conference of her Christian Democratic Union party on Tuesday evening. “But if you include services in the trade balance, the U.S. has big surplus with Europe.”

Merkel and fellow world leaders are still struggling to adapt to an unpredictable U.S. president who seems to delight in challenging allies on issues from security to exports while lauding traditional rivals and enemies in Russia and North Korea. German Foreign Minister Heiko Maas is due to deliver a keynote speech in Berlin on Wednesday laying out his proposals on how Europe should react to an unreliable ally in the White House.

Merkel indicated she lobbied Trump to refrain from slapping tariffs on U.S. vehicle imports from Europe, a measure that threatens to hit German carmakers the hardest. She said she proposed a study of the car industry’s “strategic importance” on both sides of the Atlantic, followed by talks with the goal of avoiding unilateral measures.

Trump said on Twitter in March that if the EU drops its “horrific barriers & tariffs on U.S. products going in, we will likewise drop ours,” but that he would otherwise “tax cars.”

It would be best if Trump accepted the facts and droped his protectionist agenda, which will send the global economy into a big recession; however, the pampered man-child Donald is unlikely to see reason.

The only way to deal with him is by replying tit for tat on trade measures in the goods trade, while simultaneously tightening the regulatory screws on the US's global services providers. This is the most powerful trade weapon the EU can yield. In addition, it has the benefit of allowing European competitors to get a foot-hold in the market that's dominated by US quasi-monopolies. Further, taxing digital services will give the EU it's own independent tax resources. It has so many advantages that we should have done it even without Trump.

The EU single market is big enough to cause considerable pain for US multinationals. But I'm confident that most other countries will follow with similar measures.

[One Degree]

Why would the EU report I cited show ‘service trade’ as equal if Merkel is right?
Using international business as only a US asset also seems dishonest. They are international.

[Rugoz]

“Trade surpluses are still calculated in a pretty old-fashioned way, based only on goods,” Merkel told a business conference of her Christian Democratic Union party on Tuesday evening. “But if you include services in the trade balance, the U.S. has big surplus with Europe.”

This is nonsense. Politicians are so fucking useless

The US benefits enormously from international trade through the earnings of its multinationals.

Multinationals are an interesting topic, but counting all sales of US companies abroad as US exports is obviously nonsense.

[Atlantis]

If you guys are right, so much the better, we can squeeze the shit out off US multinationals and it won't matter to the US.

I bet the US reaction will prove you wrong.

@Rugoz, of course it's not possible to count all sales of US multinationals abroad as "exports," but neither is it possible to reduce trade relations to the export of goods, as Trump seems to think. The whole thing is a lot more complicated.

Anyways, there can be no doubt that US wealth depends to a large extend on the assets of US multinationals abroad. And these assets will become a target in any trade war.

[One Degree]

Perhaps a trade war is a way to end these multinational leeches. I volunteer to suffer quite a bit to see foreign ownership ended. Multinationals are the real threat to ‘will of the people’ in every country.

[Atlantis]

Perhaps a trade war is a way to end these multinational leeches. I volunteer to suffer quite a bit to see foreign ownership ended. Multinationals are the real threat to ‘will of the people’ in every country.

How much are you prepared to suffer? Are you prepared to pay 1,000 dollars for a smartphone instead of 100 dollars? Are you prepared to lose half or two thirds, or more, of you buying power?

Believe me, you don't have the stamina to live in a world without international trade and/or multinationals.

I grew up 60 years ago on a small family farm. We produced more than 90% of what we consumed. Life wasn't bad, but nobody can tell me that people today would be able to live under those conditions. Never!

[One Degree]

How much are you prepared to suffer? Are you prepared to pay 1,000 dollars for a smartphone instead of 100 dollars? Are you prepared to lose half or two thirds, or more, of you buying power?

Believe me, you don't have the stamina to live in a world without international trade and/or multinationals.

I grew up 60 years ago on a small family farm. We produced more than 90% of what we consumed. Life wasn't bad, but nobody can tell me that people today would be able to live under those conditions. Never!

I don’t have a smart phone. I don’t need one though I admit they are cute toys. I am more than willing to live without these things, but there is no reason to assume that would happen. The threat of poverty is only due to artificially increasing our ‘needs’. No one will suffer real poverty. Might even be good if recent generations did suffer a little. I don’t see surplus wealth as all good for us.

[Rugoz]

of course it's not possible to count all sales of US multinationals abroad as "exports," but neither is it possible to reduce trade relations to the export of goods, as Trump seems to think. The whole thing is a lot more complicated.

The article you posted did count all sales of US multinationals abroad as exports. But you're right, it's more complicated than the official statistic on trade in goods and services, because of offshore profit shifting. That actually touches upon several posts made in this thread, e.g. the US having a positive net capital income, and how repatriation of profits might affect trade balance respectively the current account. I will expand on that when I have the time.

[Atlantis]

I will expand on that when I have the time.

I'm looking forward to that.

Merkel is right that traditional ways of representing trade flows of goods and/or services don't give an accurate picture of trade relations. Even current account figures don't give a true picture because they include FDI but don't include earnings stashed away in tax havens. Since the trillions of dollars from earnings in Europe or elsewhere stashed away by US multinationals in tax havens don't show up in any trade statistic, nor even in the current account figures, corporate earnings need to be taken into consideration in one way or another to get a full picture.

In the meantime, the trade war is heating up again. China announced that its previous agreement with the Trump administration is off and that China will impose punitive tariffs on 50 bln of US imports to balance US punitive tariffs.

China retaliates with equal tariffs on U.S. imports

Key takeaways from the Ministry's statement:

- China will immediately introduce taxation measures of the same scale and same strength immediately.
Previous trade agreements between China and the U.S. are “no longer valid.”

- “We deeply regret that the United States has disregarded the consensus it has formed and is fickle, provoking a trade war.”

- China wants other countries to do the same to the U.S. to “put an end to this outdated and regressive behavior.”

- The U.S. has “damaging bilateral interests but also undermining the world trade order.”

Interestingly enough, Trump is hitting industrial products from China like robots while sparing consumer goods like iPhones. He doesn't want to upset American consumers but doesn't mind damaging US manufacturing which will become less competitive as a result. Thus, he continues the destruction of US manufacturing began by previous administrations. The only difference is that he wants foreigners to foot the bill for dysfunctional US trade policy.

@One Degree, where is your agreement with China that was to put pressure on the EU now? Trump is just flailing around wildly without any strategy. When big brother Xi will give him a good beating in the end, he won't know what hit him. The only thing he has achieved so far is to find a new buddy and role model in dictator Kim. When he wants his people to "sit up and pay attention" to him like they do to Kim in NK, its only half a joke.

He has sacked most competent trade negotiators and diplomats while surrounding himself with yes-men who have to compete for fulfilling his every wish to avoid being axed. His narcissistic personality is most suited to the role of a dictator.

After Canada, the EU has also formally decided on punitive tariffs against US goods.

EU endorses counter trade tariffs against the US

Following Trump's savage attack on Trudeau there's also a movement to boycott US products in Canada. Tourists traveling to the US have declined since Trump came to power and the US now ranks behind Spain in the list of favorite tourist destinations.

At the G7, Trump told Juncker "you're a brutal killer," which was apparently meant as a compliment. @One Degree, in the EU, the former head of a small country of 600 thousand commands more respect than the head of a country of 120 million like Japan, where Abe gets kicked around by Trump no matter how deep he bows. Where is your "sovereignty" when you are being kicked around?

[One Degree]

@One Degree, where is your agreement with China that was to put pressure on the EU now?

Sorry @Atlantis , I don’t know what this refers to. The rest of your post is just your opinion. I see no evidence of the EU believing in the autonomy of small countries.
I also find it amusing abusive multinational companies are only associated with the US. Where does that nonsense come from? I am against them no matter what country they are supposedly aligned with.
International corporations and liberal globalism are two allied armies with the same goal. Amazingly, they often don’t understand they are allies.