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Economics 101: Tariffs And Trade—Part 2; Deficits, China And More, Rod Mabry, Manuel Reyes-Loya
Economics 101: Tariffs And Trade—Part 2; Deficits, China And More, Rod Mabry, Manuel Reyes-Loya
Hibbs Brief
In our first Hibbs Brief on tariffs and trade, we noted that trade imbalances with a specific trading nation are the natural result of specialization. We wrote that one should not expect annual trading accounts in goods and services to balance between two given countries at the end of each year. There are deficits with some countries, surpluses with others—and different results by nation in different years. However, we expect general balance between our exports and imports across all accounts with all other countries combined, and that’s been our past history.
Economics 101: Tariffs And Trade, Rod Mabry, Manuel Reyes-Loya
Economics 101: Tariffs And Trade, Rod Mabry, Manuel Reyes-Loya
Hibbs Brief
Basic economics tells us trade with others benefits all. That is the basis for us being economists and you being a barber, banker, manager, or oil man. We all specialize according to our talents, work preferences, and available resources. We then work hard and trade the goods and services we produce. Specializing, rather than producing our own food, our own clothes and our own houses, allows us to become much more efficient producers. That added efficiency results in much higher total output, lower prices and higher incomes.