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Mon 14 Aug, 2006 10:00 am
Can a balance-of-payments surplus for the U.S. can be correct by reducing tariffs on foreign goods.
It is doubtful. The United States has a negative balance of payments because we import far more than we export--it's a very simple equation. Ordinary consumer goods of the commonest kind--shoes, clothing, small household items and small consumer electronics--are increasingly produced outside the nation. Virtually every consumer in the United States routinely buys imported goods constantly, some on an almost daily basis. Even an increasingly significant proportion of food stuffs are imported.
The United States has always been primarily an agricultural nation, in terms of exports. Even in the salad days of a strong, positive balance of payments in the United States, this was largely accomplished through the export of agricutural products and lumber, and through the exploitation of the carrying trade. The United States is almost completely out of the carrying trade, except for intercoastal transport, a relatively small amount of the carrying trade. Even in the case of agricultural goods, we frequently export our production, only to pay for it when it has been "re-imported," value-added. A stricking example is in the forestry industry. The United States now routine exports raw lumber, which is milled cheaply overseas, and re-imported as finished products or consumer lumber. Even third-world countries are so stupid as to export their timber to be milled elsewhere. We are "enjoying" the "benefits" of "globalism" with a vengeance.
Re: A balance-of-payments surplus
bap0422 wrote:Can a balance-of-payments surplus for the U.S. can be correct by reducing tariffs on foreign goods.
No.
By definition, every country's balance of payment is zero, give or take a statistical discreptancy reflecting that statisticians can only track payments with imperfect precision. When the US government lowers its tariffs, this decreases the payments by foreign exporters to the US government. But it also decreases US-owned assets abroad, for a net wash in the US balance of payments.