The trade deficit is not really important, however if you do the math, five hundred billion dollars probably equates to around two and a half million U.S. jobs lost as a result, per year. Now, that’s a big number!
WIXOM, Mich. (PRWEB) June 10, 2018
Bill Poulos, CEO of Profits Run, Inc., today announced his estimation of the effect of continuous unfair international trade agreements on U.S. citizens. Poulos’ broadcast comes after Mexico and the European Union both announced that they would impose tariffs on U.S. goods in response to the tariffs imposed by the U.S. on goods such as steel and aluminum. Bill Poulos remarked, “Mexico recently stated that they are going to impose tariffs on U.S. exports to Mexico in retaliation for U.S. imposing tariffs on aluminum and steel imports from Mexico. The EU announced the same the following day. Of course, this has the media in an uproar that, for them, confirms that this whole business of enacting tariffs in order to balance trade is a bad idea because it historically triggers trade wars and leads to a reduction in their national trade. We have to look at the backdrop on all of this to make any kind of assessment as to whether this is a serious action (or not) as it would impact international trade.”
Business Insider reported (6/6/2018) that the European Union and Mexico announced “retaliatory tariffs” on United States goods, such as pork, bourbon, and cranberries. These moves from U.S. allies come in response to the trade tariffs President Trump recently imposed on aluminum and steel.
Bill Poulos continued, “The U.S. trade deficit has been running at about five hundred billion dollars per year for some time now. A lot of economists will tell you that that’s not important. The trade deficit is not really important, however if you do the math, five hundred billion dollars probably equates to around two and a half million U.S. jobs lost as a result, per year. Now, that’s a big number! So, in actuality, the U.S. trade deficit running at about five hundred billion dollars per year is significant. So, why is the trade deficit so high? It has to do with Fair Trade practices including the valuation of currencies, which is near the top of the list. For example, if the Mexican peso is undervalued by even 10%, then that’s like imposing a 10% discount. It’s like discounting Mexican products by 10%, as an example. Then you have other government subsidies that are not so obvious that are manipulating the currency to control the competitive balance out of whack. Ultimately, the United States really has been taken advantage of year after year. No one seems to understand that or care about it or anything else because it doesn’t really trigger attention, getting excitable headlines such as Mexico putting tariffs on. It’s important to look at these things with a comprehensive view.”
Poulos went on to explain, “So, where is this all going to lead? Mexico has slapped that tariff now on their cultural related goods—in this case hogs is at the top of the list, so that’s going to be a negative impact on the hog farmers. In particular it will negatively impact the hog farmers in Iowa and that could throw people out of work. That’s what grabs the headline. Well, I think a soberer assessment would be this is all part of the negotiation triggered by the United States to get a more equitable set of trade practices, not only with Mexico but around the world. So, this continues to be part of the strategy and part of the fallout of using tariffs as a negotiating tool. In the end, the tariffs will disappear in favor of some more balanced trade agreement replacing the trend specific agreement, so I don’t get too excited about it.”
In conclusion, Bill Poulos added, “In the short run, I think using tariffs to get the attention of countries that have been used to taking advantage of the U.S. for years might be the right thing to do. However, it’s not the right thing to do in the long run, so we’ll have to see how it all plays out. My guess is that it will all play out well in the end and you’ll see the United States get a square deal when it comes to international trade. This will be to the benefit of all countries.”
Bill Poulos is co-founder and president of Profits Run. He is an author, retired automotive executive, and philanthropist. Bill holds a Master of Business Administration (with a major in finance), in addition to his bachelor's degree in engineering. Poulos and his wife currently resides in Michigan. They have been happily married for more than 48 years. He and his wife, Karen, have grown boys.
About Profits Run, Inc.
In 2001, Profits Run was co-founded by father and son duo, Bill and Gregory Poulos. The company got its name from a popular saying amongst traders, "Cut your losses and let your profits run." Profits Run's mission is to educate people on a simpler and safer way to invest.