America will negotiate with weapons on the table
President Donald Trump is not right when he says the rest of the world has robbed America for decades, writes Jeffrey Sachs. The rates that Trump now requires to prevent this « robbery » will not eliminate the budget deficit, but will impoverish the Americans and will hurt the citizens of other states, says the professor at Columbia University.
« The commercial deficit of a country (more precisely the current account deficit) does not indicate some insulting commercial practices from the countries that have commercial surplus with the respective country. The current account deficit shows that the deficit country spends more than it produces. That is, it saves less than invests. The commercial deficit of America is the measure of the waste made by the leading corporate class of America, more precisely the result of the budget deficits created by the tax reductions for the rich and the thousands of billions of dollars spent in meaningless wars. Deficits are not due to the perfidy of Canada, Mexico or other countries selling more in the US than the US sells them”.
In 2024, the US had exports of $ 4.8 billion and imported goods and services worth $ 5.9 billion. The current account deficit was 1.1 thousand billion. This deficit is the difference between the total expenses of America in 2024, of 30.1 thousand billion dollars, and the national income of 29 thousand billion dollars. « America spends more than produces and borrows the difference from the rest of the world. Trump blames the rest of the world, but it’s absurd. America is the one that stretches more than its quilt”.
Let’s take the case of an employee who has a current account with the employer and a deficit with the companies from which he buys goods and services. If you spend exactly how much it wins, it will have zero deficit. But if it is prey to a compulsive shopping, it will have to have a deficit on the credit card. Are the shops that robbed him or his own waste and greed? ”
« Donald Trump says he will reduce the budget deficit by reducing the waste and abuse through the Department for Government Efficiency (Doge). However, the problem is that Doge does not correctly identify the cause of the waste. It is not about the salaries of the officials who are now fired, nor about the investments of the Government in research and development, on which our future depends. This is a combination of taxes for rich and perpetual wars of America, the perpetual financing of Israel wars and the 750 US military bases around the world, about CIA and other special services, on interest for increasing federal government.
More recently, Trump and the Republicans in Congress took in the Medical Colimator – that is, the poorest and most vulnerable Americans – to compensate for a new tax reduction for the richest Americans. Soon she could follow Medicare. Trump’s rates will not be able to reduce the US budget deficit, but will increase prices. The rates will make America poore, because they will reduce the earnings from the trade. US will become the enemy of the world, for the evil they will do to the world and for the evil they will do to the Americans« Writes Jeffrey Sachs.
The economy teacher Michael Husdon has a similar vision. « Sanctions and threats are the only things that have remained America. The US can no longer give other states a win-win situation, and Trump said that America has to win the international agreements it will make, whether it is financial or commercial agreements. Therefore, America says that no matter what agreement we conclude, we win again« Professor Hudson said that, »When you no longer have what to offer at the economic level, you can at least say that you do not want to hurt other countries, but America does not. America announces that he wants to hurt other states, and they will invest in tactics meant to escape this « diplomatic strategy » of the USA”.
« The purpose of the tariffs is to protect decadence, not children’s infrastructure, for example. The government should give up the post-industrial, financialized and rent-based economic model. But the retention has cannibalized the industry and in the US there is no political party to come with an alternative. There are no population politicians like those at the end of the 19th century, who will say « no longer crucify the workforce on golden crosses » and there are no economists to show that if America wants to become an industrial power, you will need high salaries in the industry. We have politicians like Donald Trump, who talk about the US return, in the form of an idealized autocracy, at a golden age from the beginning of the 20th century, when the rich were not taxedI ”.
In an article published by UnherdWolfgang Munchau invites us to look beyond the US president, to his team of counselors. Donald Trump is a man of tariffs, but the head of the Economic Councilors at the White House, Stephen Miran, has a much more nuanced vision. Prior to the installation of the current administration, Miran has published an article showing that the new administration will have to use the tariffs as a weapon on the negotiation table – the rates must be announced, but not necessarily implemented.
For Trump’s counselor, much more important is the devaluation of the dollar, because this way the rates would have much lower unpleasant consequences for Americans and, equally, would help American exports. This is also the vision of economist Yanis Varoufakis, former Finance Minister of Greece, who, although he is at the opposite ideological pole to Donald Trump, does not agree with those who believe that the US now promotes a harmful policy for the rest of the world and for America.
The devaluation of the dollar is the target of the Trump administration, considers Varoufakis. If Germany, for example, will be hit by the new US rates, German companies will decide to import even less than until now, maintaining a commercial surplus in relation to the US. But the devaluation of the dollar would make it difficult to apply such a strategy, because imports would become too cheap for Germany to refuse them, and German exports would become expensive. Varoufakis believes that the target of the Trump administration is the devaluation of the national currency, but without the dollar to lose its reserve currency status. The rates are the pressure lever in order to achieve this contradictory objective.
« The smart thing Trump can do now is to put the tariff weapon on the negotiation table. If Europe, Japan, South Korea and other industrialized countries will agree to strengthen their coins in relation to the dollar, then the US will reduce tariffs and maintain only those that are justified in the prism of national security.
Economic history is full of examples in which the opinions of most economists and the consensus of markets have proven wrong. I believe in the intelligence of the crowd when it comes to horse racing, not economy and finance. The chances of Trump will finally be right – or at least get what he wants – they are bigger than the majority thinks« Wolfgang Munchau writes.
The latest developments in the US relationship and the countries for which Trump has announced some of the biggest rates show that this economic war is not a purpose in itself, but an attempt by the Trump administration to reach advantageous trade agreements. At the end of last week, Donald Trump announced that he had a « very productive » discussion with the Vietnamez Commnamese communist party leader, adding that Vietnam would be willing to completely eliminate the bilateral trade, to « reach an agreement with the United States. » According to The Epoch Times, the president of Taiwan also came with the offer to eliminate the tariffs. In addition, Taiwanese companies could increase their investments in the US. « Negotiations for tariffs can start from zero rates between Taiwan and the US, as in the case of free exchange between the US, Canada and Mexico, » said President Lai Ching-Te. And the director of the Economic Council of the White House, Kevin Hasset said thatAfter announcing the new customs tariffs, the US president was contacted by over 50 governments to start negotiations.
