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> Are you arguing that countries should be wary of relying on US manufacturing? How could it be otherwise? In international trade, what you want is a partner
by rstuart4133 2y ago
> Are you arguing that countries should be wary of relying on US manufacturing?
How could it be otherwise?
In international trade, what you want is a partner who lets both of you ground through comparative advantage. They make what they are good at, you make what you are good at, goods made in both countries get cheaper and so you both get stronger.
The USA has in the blink of an eye gone a champion of free trade to a tariffed island. If the USA starts dumping and you protect your local industries with tariffs, the USA will retaliate with more tariffs. The trust needed for comparative advantage to work has gone.
The only sane response to this is to walk away from the USA as a trade partner. The only reason you wouldn't do that is you think it might be a passing phase, or you're in the denial stage of grief.
It's been less than 100 days so not much has changed yet. But as you can see from this thread, people are looking around, assessing their options. Maybe Canada investing in shipping so it can trade products with Europe or India makes more sense now. Both need the raw materials Canada produces. That will mean less trade are done in the US dollar, and it's unlikely it will remain as stable as it has been for instance (it's already bouncing around a lot), so maybe it makes sense to denominate everything is another currency. Euro's perhaps?
If you think that's unlikely consider this: a long while ago Australia's major trading partners was the UK. Then the UK joined the EU, and now it does far most of it's business in the Asia pacific. These transitions do happen when they make economic sense.
- surgical_fire 2y agoMy question was mostly rhetorical and sort of a jab at GP, who was probably alluding to China - a country that, perhaps ironically, should be considered a stable trade partner. After all, China has been a nation of merchants from time immemorial. That said, what you describe does make a lot of sense. While a country should keep some level of local industries to avoid getting completely deindustrialized, it does make sense to look for new trade partners in situation such as this. Isolationism just doesn't work in this day and age. Advanced economies are very complex beasts, and international trade makes it possible. No one country can produce everything an advanced economy needs.