"We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!"When you're already $500 Billion DOWN, you can't lose!"
I've long wondered how Donald Trump managed to lose money running a casino. The answer is suddenly coming into focus.
Larry Kudlow, the new chair of the White House National Economic Council, was asked about his boss' online comments this morning, and seemed stumped. "I'm not sure what exactly he's referring to," Kudlow told reporters.
There's a lot of that going around.
While I'm sympathetic to the argument that the president's tweets tend to get a little too much attention, the economic and trade developments are of great international consequence, so Trump's willingness to explain his thinking on the subject really does matter on a substantive level.
With that in mind, let's unpack what we've learned this morning.
According to the president, there was already a trade war with China and the United States lost. For proof, Trump points to a $500 billion trade deficit with China.
The trouble is, the president still doesn't seem to understand what a trade deficit is; the actual trade deficit with China isn't $500 billion; and making this the basis for a trade war is demonstrably ridiculous.
Remember, Trump has taken a keen interest in this subject, and has had plenty of time to get up to speed on the basics. For whatever reason, he's refused, clinging instead to his misguided assumptions.
And then, of course, there's the gem: "When you're already $500 Billion DOWN, you can't lose!" In reality, we're not actually "down" $500 billion -- the figure is wrong and that's not how trade deficits work -- but even if we accept Trump's false claims at face value, logic gets in the way.
A $500 billion trade deficit can become a $501 billion trade deficit. Or a $502 billion trade deficit. It's just how numbers work.
My point is not just to mock the amateur president who's only pretending to know what he's talking about. What matters here is that Trump is making important decisions with sweeping real-world consequences.
If he's making decisions based on little more than his own ignorance -- and by all appearances, that's exactly what's happening -- it's the public that's likely to feel the consequences.
Vox's Matt Yglesias explained this morning, "[Trump] is appealing to the idea that arbitrary restrictions on the sale of foreign-made goods will mechanically boost the American economy. There is no empirical or theoretical basis for this view, which is why no president of either party has ever attempted to make it the centerpiece of his national economic strategy. It's just wrong. It's the kind of thing you might come up with if you were a wealthy landlord and reality television personality who ran for president on a whim without learning anything about issues or public policy."