E Trumponomics: Increase Exports, Slow Imports, Bludgeon The New Normal

Trumponomics is further explained by a paper issued by the Donald's economic advisers. While I leave it to others to hammer out the nuts and bolts of the VAT tax debate, a simple analysis of the trade deficit based on common sense is in order. Targeted nations in this Trumpian effort to reduce the trade deficit include Canada, China, Germany, Japan, Mexico and South Korea, accounting for 1/2 the trade deficit.

In a nutshell, these advisers appear to have no real understanding of the New Normal at all. They want well over 3 percent growth per year (with the inflation that accompanies that), when the Fed is seemingly powerless to raise interest rates 1/4 point! In spite of the new normal and the structured finance that drives it, Trump wants to increase exports and limit imports from the targeted nations. Those two partners do not dance that well together! This is probably the least realistic madness of this whole Trumponomics plan. And it is the central point of the plan!

And the Trump advisers say they want lower energy cost, but seek to balance the trade deficit by exporting energy.

These authors, Peter Navarro and billionaire Wilbur Ross, believe that the New Normal is just a political device, created by liberals. They believe it is not permanent:

Most recently, the 2012 South Korea trade deal was negotiated by Secretary of State Hillary Clinton – she called it “cutting edge.” It was sold to the American public by President Obama with the promise it would create 70,000 jobs. Instead, it has led to the loss of 95,000 jobs and roughly doubled America’s trade deficit with South Korea. Corporate America does not oppose these deals. They both allow and encourage corporations to put their factories anywhere. However, Mr. and Ms. America are left back home without high-paying jobs. There is nothing inevitable about poorly negotiated trade deals, over-regulation, and an excessive tax burden – this is a politician-made malaise. Therefore, nothing about the “new normal” is permanent. [Emphasis mine]

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Disclosure: I am not an investment counselor nor am I an attorney so my views are not to be considered investment advice.

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