President Donald Trump’s ‘America First’ economic nationalist agenda is already being hailed as a plan that will kick-start the world economy!
Economic analyst Dr. Michael Ivanovitch writes for CNBC:
Taking a stand against excessive trade imbalances, and their huge costs for the U.S. economy, President Trump is not indulging in trade protectionism and a bunch of other “isms” thrown at him by people (a) who have problems with economics 101, (b) whose ox will be gored and (c) who are ill-disposed toward recent political changes in the United States.
The American president is appealing, in his own way, for the application of long-standing rules of international trade adjustment that were intended to underpin an orderly and stable global economic and monetary system, established by Western democracies in the closing months of WWII.
More recently, G20 economic summits have also been warning – to no avail – about the need to reduce trade imbalances because of their depressing and destabilizing effects on world economy.
And here is what these trade adjustment rules are saying. Trade surplus countries — which typically also have low inflation and roughly balanced public sector accounts – are required to stimulate domestic demand in order to increase imports from their trade partners. Trade deficit countries – which in most cases also have accelerating inflation and widening budget deficits – are required to do exactly the opposite, i.e., they have to reduce public spending and raise taxes to cut imports and force businesses to export their way out of a shrinking domestic demand.
Never under-estimate President Trump!