One more on the reciprocal tariff issue from Desmond Lachman in Project Syndicate - trade deficits have nothing to do with tariffs - it is more to do with:
"...Or, as John Maynard Keynes put it, trade deficits are driven by the gap between savings and investment. As long as a country saves less than it invests, it will run a trade deficit, no matter how high its tariff wall may be."
And the counter to that coming in the opening comments of Peter Navarro in his chapter titled "The Case for Fair Trade" where he states:
"... The first challenge is rooted in MFN: the “most favored nation” rule of the World Trade Organization (WTO). According to the MFN rule, WTO members must apply the lowest tariffs that they apply to the products of any one country to the products of every other country.3 However, WTO members can charge higher tariffs if they apply these nonreciprocal tariffs to all countries.
The practical result has been the systematic exploitation of American farmers, ranchers, manufacturers, and workers through higher tariffs institutionalized by MFN. In turn, this unfair and nonreciprocal trade has resulted in chronic U.S. trade deficits with much of the rest of the world. This systemic trade imbalance serves as a brake and bridle on both GDP growth and real wages in the American economy while encumbering the U.S. with significant foreign debt."
The debate is on.
Hat tip to Prof.Amitendu Palit for bringing to my notice Peter Navarro's chapter.
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