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“Other countries understand that they are tearing for 50 years; we have been torn directly from the beginning.”
Stop me if you hear this before, although I assume you have. The age of the quote from President Donald Trump may be only a few hours, but it is part of a decades -long view that he occupied in the place of America in the midst of the post -war boom in global trade.
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In informing the President in the United States, its markets were naively opened, which in turn benefited from this generosity by undermining American manufacturers of goods made of cheap workers supported by tax exemptions.
On the other hand, American companies are prevented from competing in the field of playing in international markets by a mixture of smiling customs tariffs, commercial barriers, ghost taxes, and environmental scientists who embrace trees.
His “tearing” schedule has narrowed to only 40 years in an end -of -weekend interview with NBC News, but the topic remained fixed throughout most of the past month: it will be April 2 “liberation day” and America will again rule the world of global trading.
There is only one problem.
He is doing it already.
The American economy has long realized that the real juice of “consumption + investment + government spending” will come from services, not manufacturing.
It has achieved unparalleled success since the global epidemic and left its international competitors, including China, and they are in dust.
It is a service economy, stupid …
Ricardo Hausman, a commercial expert and professor at Harvard University who was running an international development center at the university, notes that although the United States had a deficit of $ 1.2 trillion in the trading of goods, it carries a $ 278 billion surplus in services.
Services, of course, generate a significant profit margin of goods; Think about Apple ((Aapl)) 46 % total margin in technology compared to 30.7 % for Exxonmobil ((Xom)) (The largest source of the United States) in oil and 12.5 % trivial for General Motors ((General Motors)) The largest American car manufacturer.
Related: Goldman Sachs S&P 500, targeting GDP as a Trump tariff base
So, while the United States has a trade deficit in goods, it still earns more – much more, in fact – by selling services. American companies achieved $ 632 billion in foreign profits last year, more than 82 % of foreign companies amounting to $ 347 billion in the United States
In a recent article for the Project Project, Hausmann says that the use of American stock reviews, “the value of US investment abroad can be estimated at $ 16.4 trillion”, which is now a “more attractive goal to take revenge on customs duties on US exports.”
They also earn more money with the same amount of people: European companies employ about 4.7 million people in the United States last year, while American companies were directly responsible for about 5 million jobs throughout the European Union, the United Kingdom and Switzerland.
Technology giants on the front lines
This certainly explains the reason for the decrease in the value of the S&P 500 to about 5 trillion dollars over the past month, amid the worst performance in the first quarter of the standard in five years, as investors did not wait for details of Trump’s identification plans on April 2, but also surrendered to the inevitable revenge of the country’s largest commercial partner.
China has already determines its offensive line with new restrictions on NVIDIA, linked to environmental regulations, as well as indel for competitors in the world’s largest smartphone market.
Related: A tariff of uncertainty leads to changing the record number of US stock market expectations
According to what Europe has prepared a similar strategy, reports indicate that the strong competition committee in the region can accelerate investigations to Microsoft ((Msft)) Google Parent Alphabet ((Googl)) Parents ’platforms on Facebook ((Dead)) .
The instant profits of the largest companies in America are at risk in the hope that manufacturing functions will return in one way or another over the next few years (or maybe lon) seem to be a bad bet.
Commercial wars put everyone at risk
It will look worse if, as many market monitors expect a harsh tariff for everything from cars to drugs to wood and French wine will lead to inflation while disrupting global supply chains slows the local economy. (The sound is familiar?)
America does not need this trade war. It already reaps huge rewards in terms of cheap commodities, reliable foreign investment, low government borrowing costs and increasing companies’ profits.
More economic analysis:
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- 7 fast food from the notes of the Federal Reserve Chairman Jerome Powell
- Retail sales add new complications to the expectations of reducing federal reserves
Are there unfair practices? certainly. Indian protectionism needs a comprehensive reform, and the theft of intellectual property in China has become long for a long time, and the role of Europe that he imposed on himself as a global policeman of technology has become exhausted and completely frankly.
But these are all of the issues that have been better resolved in collective negotiations (the type that Trump hates) and not through mono -side penalties (he loves, because it provides the opportunity to strike the “deals” that he can claim).
America won this trade war long ago. Reconsidering the battlefield will not make anyone richer.
Related: crushing the dollar will not solve the problem of America’s debt. It will make it worse
