The most important problem that a bilateral deal between the United States and China needs to resolve is Chinese theft of US firms’ technology. Unless the Chinese agree to stop stealing technology, and the two sides devise a way to enforce that agreement, the US will not have achieved anything useful from Trump's tariffs.
Chinese negotiators recently offered to buy enough American products to reduce the bilateral trade deficit to zero by 2024. Why, then, have US negotiators rejected that as a way to end the dispute?
Given that the US Federal Reserve has long said that its interest-rate policy is “data dependent,” why has it pressed ahead with monetary tightening in the face of worsening economic indicators? Three reasons stand out.
Providing benefits to support a comfortable standard of living for retirees with just a modest rate of tax on the working population depends on there being a small number of pensioners relative to the number of taxpayers. That is no longer the case.
August 22 marked the longest period of rising share prices in US history. But the stock market's nine-year bull run won't last much longer, as three factors drive up long-term interest rates, reducing the present value of future corporate profits and providing investors with an alternative to equities.
Countries that rely on pay-as-you-go public pension systems are running up against two problems: increasing life expectancy and rising old-age-dependency ratios. How can such systems be sustained without massive tax increases?
The federal government’s debt has risen from less than 40% of GDP a decade ago to 78% now, and the Congressional Budget Office predicts that the ratio will rise to 96% in 2028. While many blame the tax cuts enacted last year, the real reason lies elsewhere.
The Trump administration's proposed tariffs on steel and aluminum imports will target China, but not the way most observers believe. For the US, the most important bilateral trade issue has nothing to do with the Chinese authorities' failure to reduce excess steel capacity, as promised, and stop subsidizing exports.
The US economy has experienced nine recessions during the last 50 years. What makes the current situation unusual and more worrying than in the past is the low level of short-term interest rates and the high (and rising) level of federal debt, which will limit policymakers' ability to provide the stimulus needed to counter a recession.
The US government should focus on combating foreign governments’ trade policies – such as technology theft, non-tariff barriers to US exports, and forced technology transfers – that hurt American firms without any offsetting benefits to American consumers.
The US Congressional Budget Office has estimated that some 32 million people would lose their formal insurance coverage in the next decade under the various proposals to replace "Obamacare." But it is important to understand just what that would mean in practice, and how much it would actually affect health outcomes.
Even if China opened its markets fully to US goods and services, the total US trade deficit would not change. But focusing on imbalances with individual countries can nonetheless lead to desirable policy changes, as the Trump administration's approach to China has shown
Reducing the US trade deficit requires Americans to save more or invest less. On their own, policies that open other countries’ markets to US products, or close US markets to foreign products, will not change the overall trade balance.
