Every year the US Census tabulates our imports and exports. Following that link, you can see that the current value of net exports, i.e. the difference between exports and imports is -$500 billion.
So what's the big deal about a trade deficit?
Historically, a trade deficit meant gold and other commodities were leaving your country. Today it means that US dollars are leaving. As I've mentioned on this blog in the past, the effect is that less money is spent on domestic goods resulting in slower GDP growth.
The biggest single driver of our trade deficit is oil imports. Last year alone we imported about 6.9 million barrels of oil per day -- and thanks to Obama's energy policies, that's actually at a 25 year low. Today on Twitter, I decided to quantify that a little:
Even if oil does fall back to $50 a barrel, that's still $125 billion out of $500 billion, or a quarter of our deficit. At $100 a barrel, we'd be looking at 40% of the deficit.
The answer is simple. We don't need tariffs, we need to get off oil.
So what's the big deal about a trade deficit?
Historically, a trade deficit meant gold and other commodities were leaving your country. Today it means that US dollars are leaving. As I've mentioned on this blog in the past, the effect is that less money is spent on domestic goods resulting in slower GDP growth.
The biggest single driver of our trade deficit is oil imports. Last year alone we imported about 6.9 million barrels of oil per day -- and thanks to Obama's energy policies, that's actually at a 25 year low. Today on Twitter, I decided to quantify that a little:
@LupoYigal @donnastjohn @TheEconomist the bulk of the deficit is oil related. You want to eliminate our trade deficit, switch the US off oil— Daily Combover (@tgcCombover) January 19, 2017
@LupoYigal @donnastjohn @TheEconomist under @BarackObama net oil imports lowest since '93, but still 7M bbl per day. https://t.co/brQDvNsnBs— Daily Combover (@tgcCombover) January 19, 2017
@LupoYigal @donnastjohn @TheEconomist @BarackObama Even at $50/bbl, that's still > $125B. & oil prices are now on the rise. #PetrolPriceHike— Daily Combover (@tgcCombover) January 19, 2017
@LupoYigal @donnastjohn @TheEconomist @BarackObama Most worrisome is the import growth under Reagan and Bush. We are likely to repeat that.— Daily Combover (@tgcCombover) January 19, 2017
@LupoYigal @donnastjohn @TheEconomist @BarackObama meanwhile Trump talks about punitive tariffs on manufactured good. That hurts consumers.— Daily Combover (@tgcCombover) January 19, 2017
Even if oil does fall back to $50 a barrel, that's still $125 billion out of $500 billion, or a quarter of our deficit. At $100 a barrel, we'd be looking at 40% of the deficit.
The answer is simple. We don't need tariffs, we need to get off oil.
No comments:
Post a Comment