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Comment by Workaccount2 | Hacker News Reader

The US (well Trump and his supporters) want to make American manufacturing competitive in foreign markets in order to draw more investment into new domestic manufacturing capacity.

A huge hurdle for American manufacturers is that their products simply cost too much, all else being equal, because the value of the dollar is too high.

So their plan is try and devalue the dollar while also keeping it the reserve currency. To put that another way, he wants countries that have invested in the dollar to take a hit on their investments while also getting their population to buy more American goods.

His negotiations will probably center around offering continuation of "America world police" services (people hate it, but governments love it) in exchange for following this path.

Whether or not this will work? Who knows, but at least that is the idea they have chosen.

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Any conversation about trade imbalance is silly if you only look at goods and ignore services.

In New Zealand as a purchaser of a lot of US services and few US goods, I can see why countries want to create tariffs against US services.

Services are white collar and goods are blue collar.

Trump was elected by blue collar workers and his plan reflects that.

His trade deficit calculations also reflects this, and he gets pissed off when someone like Canada or the EU call him out on it. Canada’s digital services tax modeled after Europe, for example, was a non-starter for the Trump admin even though he didn’t bother to include services in his trade deficit calculations.

Fine: just don't write economic arguments if that is what you want to say.

Blue Collar workers: ~ 30–35% of working population. Policy that screws your country and the other 2/3rds of the population is bad.

I do think a country needs a manufacturing base if it wants to support a military without getting pwned.

World police is also not an argument anymore. Noone has faith into current US administration. They simply can walk away from their allies or even stub into their back.

Alternatively, Trump is extremely transactional and actually thinks that trade deficits represent other countries taking advantage of the US.

For example, tariffs on agricultural products that won't grow in the US do not fit into any sort of rational model.

That isn't alternatively, it's parallel. Trump is an idiot and may or may not understand any of this. But his economic team does have a plan.

My comment just outlines that plan.

Expecting people that don't exist to take jobs that are lower value than working at McDonalds is not "a plan".

Plenty of US manufacturing already pays close to retail wages and these geniuses want to reshore stuff with much lower value add. It's delusional.

I don't understand why this is downvoted, I think people are thinking you are promoting a view, while you are non-judgmentally guessing.

And I do agree with you, I think the current administration is focused on devaluing the dollar, while trying hard to minimize collateral damage such as higher rates.

I don't think this is going to work, but I can see a lot of ways in which it could. Future will tell us.

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