Kindergarten Arithmetic 101: Analysis of the Trade Debate
Kindergarten Arithmetic 101
If Trump extends his wall to cover the entire border, instead of just the one shared with Mexico, and then bans or punitively tariffs every single good that uses steel as an input, recursively, as well; he just may succeed in driving up the domestic price of final goods, to the point where both nominal labor compensation and nominal raw materials prices can be increased at the same time.
In doing so, he will ensure that not a single American made product of any kind, will be internationally competitive over time. This is exactly what the Latin American import substituting “structuralists” did, back in the 50s and 60s.
The above analysis from reader "Stuki" is obviously correct.
Disappointingly, there is debate over the obvious. And that's not the only flaw of economic illiterates.
Mathematical Explanation of Deficits
For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".
Mike "Mish" Shedlock