US China Agreement – But Countries Don’t Trade With Each Other, People Do


This latest announcement about the trade spat between the US and China shows a certain lack of understanding of the basics here. For they’ve gleefully stated that China will buy more US goods, thereby closing that bilateral trade deficit. The problem here being that it isn’t actually countries that trade with each other. Sure, of course, actual governments do buy things but that’s not what we’re talking about here at all. Rather, it’s the people who happen to live within certain lines on the map who trade with people who live within certain other lines.

So, how do we force people who happen to live in China to buy more stuff from people who happen to live in the United States? Further, would we actually be happy about the liberty and freedom enjoyed under any government that could manage to force such things to happen?

This is before we even get to the basics, which is that trade deficits don’t matter and bilateral ones don’t matter a damn:

America has pulled back from launching a trade war with China that could have destabilised the global economy, by agreeing to put proposed tariffs on Chinese imports “on hold”.

The Treasury secretary, Steven Mnuchin, said on Sunday that negotiations with Chinese officials have borne fruit, meaning Washington and Beijing can step back from imposing punishing tariffs on each other’s exports.

“We’re putting the trade war on hold, right now, we have agreed to put the tariffs on hold while we try to execute the framework,” Mnuchin told Fox News.

Obviously, it’s good news that the tariffs aren’t going to be imposed. After all, it’s not normally thought of as part of valid statecraft to make your own people poorer. Which is what tariffs do, they make things more expensive for the buyers of goods. The people who pay US import tariffs are the people inside the tariff barriers, American citizens.

It’s this though:

The United States and China have stepped back from a trade war, after the Asian giant agreed to “significantly increase purchases” of American goods and services.

How? They going to put security men inside the shops? Comrade, buy American or it’s the laogai for you? No, really, that American car looks so much better than that Japanese one, don’t you think? American beef is so much more tasty than our own.

If not that then what?

The entire approach to this misses the most important point. That it’s not countries which trade with each other but people. It being that which explains why trade deficits don’t matter in the slightest. For if it’s not the nation doing the trading then why should any imbalance be of any interest to said nation?

In short, what the hell are they on about?