Jeffrey D. Sachs – ScheerPost.com April 3, 2025
U.S. President Donald Trump is trashing the world trade system over a basic economic fallacy. He wrongly claims that America’s trade deficit is caused by the rest of the world ripping off the U.S., repeatedly stating things such as, “Over the decades, they ripped us off like no country has never been ripped off in history…”
Trump aims to close the trade deficit by imposing tariffs, thereby impeding imports and restoring trade balance (or inducing other countries to end their rip-offs of America). Yet Trump’s tariffs will not close the trade deficit but will instead impoverish Americans and harm the rest of the world.
A country’s trade deficit (or more precisely, its current account deficit) does not indicate unfair trade practices by the surplus countries. It indicates something completely different. A current account deficit signifies that the deficit country is spending more than it is producing. Equivalently, it is saving less than it is investing.
America’s trade deficit is a measure of the profligacy of America’s corporate ruling class, more specifically the result of chronically large budget deficits resulting from tax cuts for the rich combined with trillions of dollars wasted on useless wars. The deficits are not the perfidy of Canada, Mexico, and other countries that sell more to the U.S. than the U.S. sells to them.
To close the trade deficit, the U.S. should close the budget deficit. Putting on tariffs will raise prices (such as for automobiles) but not close the trade or budget deficit, especially since Trump plans to offset tariff revenues with vastly larger tax cuts for his rich donors. Moreover, as Trump raises tariffs, the U.S. will face counter-tariffs that will directly impede U.S. exports. The result will be lose-lose for the U.S. and the rest of the world.
Let’s look at the numbers. In 2024, the U.S. exported $4.8 trillion in goods and services, and imported $5.9 trillion of goods and services, leading to a current account deficit of $1.1 trillion. That $1.1 trillion deficit is the difference between America’s total spending in 2024 ($30.1 trillion) and America’s national income ($29.0 trillion). America spends more than it earns and borrows the difference from the rest of the world.
Trump blames the rest of the world for America’s deficit, but that’s absurd. It is America that is spending more than it earns. Consider this. If you are an employee, you run a current account surplus with your employer and a deficit with the companies from which you buy goods and services. If you spend exactly what you earn, you are in current account balance. Suppose that you go on a shopping binge, spending more than your earnings by running up credit-card debt. You will now be running a current account deficit. Are the shops ripping you off, or is your profligacy driving you into debt?
Tariffs will not close the trade deficit so long as the fiscal irresponsibility of the corporate raiders and tax evaders that dominate Washington continues. Suppose, for example, that Trump’s tariffs slash the imports of automobiles and other goods from abroad. Americans will then buy U.S.-produced cars and other merchandise that would have been exported. Imports will fall, but so too will exports. Moreover, new tariffs imposed by other countries in response to Trump’s tariffs will reinforce the decline in U.S. exports. The U.S. trade imbalance will remain.
While the tariffs will not eliminate the trade deficit, they will force Americans to buy high-priced U.S.-produced goods that could have obtained at lower cost from foreign producers. The tariffs will squander what economists call the gains from trade: the ability to buy goods based on the comparative advantage of domestic and foreign producers.
The tariffs will raise prices for automobiles and wages of automotive workers, but those wage hikes will be paid by lower living standards of Americans across the economy, not by a boost of national income. The real way to support American workers is through federal measures opposite to those favored by Trump, including universal health coverage, support for unionization, and budget support for modern infrastructure, including green energy, all financed with higher, not lower, taxes on the wealthiest Americans and corporate sector.
The federal government does not cover its overall spending with tax revenues because wealthy campaign donors promote tax cuts, tax avoidance (through tax havens) and tax evasion. Remember that DOGE has gutted the audit capacity of the IRS. The budget deficit is currently around $2 trillion dollars, or roughly 6 percent of U.S. national income. With a chronically high budget gap, the U.S. trade balance will remain in chronic deficit.
Trump says that he will cut the budget deficit by slashing waste and abuse through DOGE. The problem is that DOGE mispresents the real cause of the fiscal profligacy. The budget deficit is not due to the salaries of civil servants, who are being wantonly fired, or to the government’s R&D spending, on which our future prosperity depends, but rather to the combination of tax cuts for the rich, and reckless spending on America’s perpetual wars, U.S. funding for Israel’s non-stop wars, America’s 750 overseas military bases, the bloated CIA and other intelligence agencies, and interest payments on the soaring federal debt.
Trump and the Congressional Republicans are reportedly taking aim at Medicaid—that is, at the poorest and most vulnerable Americans—to make way for yet another tax cut for the richest Americans. They may soon go after Social Security and Medicare too.
Trump’s tariffs will fail to close the trade and budget deficits, raise prices, and make America and the world poorer by squandering the gains from trade. The U.S. will be the enemy of the world for the harm that it is causing to itself and the rest of the world.
Yet another Jew trying to pour cold water on Trump’s reforms, the third at tts today
Americans are going to be buying less and spending more. Is that how it works?
In George Orwell’s ‘Animal Farm’ even Napoleon had his dogs.
Who has America got on its side?
Who was the meanest pig in Animal Farm?
Togoda
“In George Orwell’s “Animal Farm,” the meanest pig is undoubtedly Napoleon. As the story unfolds, Napoleon emerges as a tyrannical leader who manipulates the other animals for his own gain. He uses fear tactics, propaganda, and violence to maintain control over the farm, showcasing his ruthless nature.Napoleon’s rise to power is marked by his cunning strategies, including the expulsion of his rival, Snowball, and the alteration of the farm’s commandments to justify his actions. By the end of the novel, the other animals can no longer distinguish between the pigs and the humans, symbolizing the complete betrayal of the revolution’s ideals. This transformation highlights the theme of corruption and the cyclical nature of power. Ultimately, Napoleon represents the darker side of leadership, illustrating how absolute power can corrupt and lead to oppression, making him the meanest pig in “Animal Farm.”
You just wait if the rest of the world comes after you for what you did on 9/11 and everything else you’ve done since then…
You are now asking to be thoroughly investigated.
Watch the crash by understanding the latest Elliott Wave count:
https://danericselliottwaves.org/
Can you say grand supercycle crash?
Sachs of course is just one more bid globalist bullshitter.
Reciprocal tariffs likely will depress the economies of our nations but the real plan and purpose was to check the growing dominance of the international corporatocracy and China flooding our home markets with their low-cost-labor goods. If we cannot stop the economic crippling effects of OUTSOURCING without balancing trade deficits by controlling our home markets, then what in hell does this internationalist Sachs think will stop the slide of the West into bankruptcy with all of the deficit financing with the loss of the ability of our nations to produce anything including children????
Some economist.
This historical analysis of Trumpenstein’s tariff chaos makes sense…
.
I suspect what Trump is thinking is not too dissimilar to an attempt at a business made by a local couple back in the ’90s which was pretty much doomed before the shop opened. The wife was a hairdresser and the idea was they’d only cut the hair of those who were sixteen and under, in the false belief they would attract all the local business for cutting young people’s hair, and kids would turn up from miles around. All that business plan did was shut out their main customer base, the over-16s and adults, because what kid’s going to travel miles just to have his hair cut when he only need go just a few blocks at the most? Needless to say that shop didn’t stay open long.
Though a bit different in structure I think Trump’s business plan makes similar assumptions. Wherehis plan looks like stumbling is his assumption that because companies always wanted to sell in America therefore they will always want to. Not those who find it’s no longer profitable, they won’t. “It’s nothing personal. It’s just business!”
The bottom line is that without tariffs our nations will die and even if the Chinese goods are cheaper the way things are going our debt instruments are no good and we will reach a point where we cannot afford to but the LC (low cost) foreign goods any way. In giving up our real Maker and self determination for a pottage of materialistic ticky tacky and globalist stew, we have stopped being the makers of things, and even of children and families. We even now say that “we can’t afford to” make our own stuff and even children.
Sachs, of course, is just one more of the privileged few whose tribe has dominated the global and home markets mainly by the control of the bankster money power, and their resulting controls over most major assets, the media and our governments. Since the implementation of the various Kissinger plans, including the opening of trade with communist China, a process that Rothschild-Rockefeller puppet began in the early 1970’s with Mao and Nixon, each of our Western nations were turned from creditor nations into debtor nations, and all within 20 years of 1979 – the year of the official opening of trade with that nation.
Paul Craig Roberts, who comes across as an American patriot, said in an article a few years back on this site that the resulting massive trade deficits with foreign nations such as China were balanced by the US dollar being the “world reserve currency” (in which, by the way, all our currencies in the West are pegged), and that we could just keep printing money out of nothing with the producing nations buying our treasuries and debt instruments in exchange, which served to balance the huge deficits. However, that system was bound to fail and has failed.
Meanwhile, it was the money changers and all of those who received their favors in setting up factories in places such as China to flood our markets with their LC goods, which killed off our own manufacturing industries. In effect, that class on financiers and entrepreneurs are totally responsible for the outsourcing of the wealth of our nations not only to places like China, but mainly to themselves, who are now the global middlemen. That is precisely the reason why the greedy globalist owners are so big on pushing the ideas of “equality” and “openness” through all of their puppet globalist governments. It is all based on “free trade” whereby they have milked and milked our nations into the verge of economic ruin while they have diverted their vast profits to offshore holdings and into favored foreign nation states.
A more realistic and honest economist is Robert Lighthizer, who was the US trade representative from 2017 to 2021. He has steadfastly advocated “balanced trade” to save our economies and our nations from the globalist corporatocracy grabs and from economic ruin. On a recent Tucker Carlson interview he pointed out that the US has been using both arms production and its military threat as collateral to balance its massive foreign debt problem. In that sense he said that instead of gold to base the US dollar, (which incidentally was cast aside in the 1970’s in preparation for trade mainly with China), the US petrodollar in exchange has been more based on “lead” (meaning the military) to balance things. The history is that the US has in fact used military threats and arms sales to coerce nations to buy their treasuries which in turn keeps the value of the dollar up by virtue of that contrived demand.
That practice created a virtual protection racket in which it was necessary to have nations such as the USSR as a military threat to the West and necessitated the left-right divide in many nations, all in order to maintain the Military Industrial Complex and either coerce or take over one nation after another. That nationalistic practice, as we now can see more clearly, was a cardinal justification for the internationalist oligarchs to push their UN Agendas and plans essentially to cancel nation states and establish a world government.
So, on one hand, all the people of the West were offered was a continued Ponzi scheme of debasing our currencies and backed by US MIC collateral, and on the other hand, UN-style globalism which is either unilateral or multilateral and in any case in intended to level everything on the basis of universal DEI, except of course for the ownership rights and privileges of the 1%. Ignored until recently has been the solution of REAL ECONOMIC AND PEACFUL SUSTAINABILITY WITH BALANCED TRADE, for nations to control and balance foreign trade to what they can really afford, without either becoming wards of the international bankster cartel and subject to its exploitation and totalitarian controls. or on the other hand remaining fodder for the bullying superpowers.
Such a solution is simply anathema to globalists such as Sachs and all of the globalist stooges working essentially under the direction of the 1% few who claim to own over 85% of the assets of the world.
The Illuminists wanted to take the world from Whitey and give it to slants, but the slants were greedy and double-crossed them, so now it is a new game
Zion Don the Con Chump vomited out, “Over the decades, they ripped us off like no country has never been ripped off in history…”…Of course, that applies perfectly to the Jew-run “central banking” cabal and the “Federal Reserve”, which is not federal nor does it have any reserves unless one is referring to the legion of kikes behind it, but, of course, that’s NOT actually what Chump was referring to….which shows one of two things, and possibly both – that he is a clueless f*cking retard or deeply compromised and covering for the Jew fake money debt slavery racket. We know damn well the latter is true, and the former is certainly leaning that way as well.
Some work colleagues of mine were shitting their pants about the rigged stock market taking a piss today, then one of them chirped up about how Trump’s goal was to “reset” the economy. I had to interject and say that it will all mean nothing and we are all doomed unless the federal reserve central robbery and debt slavery system is shut down and the ringleaders hanged for it. I may as well have said it in ancient Greek as most of them had no idea what the f*ck I was talking about, so I quoted Henry Ford on the “banking” system and left the imbeciles to stick their thumbs back up their asses.