Wednesday, November 30, 2016

Trump sum fallacy

Our new secretary of commerce thinks that he can measure bilateral trade with Mexico.  No, about 40% of that trade is tri-lateral, within the California,Mexico, and Texas loop.  That portion does not add directly.
Yahoo: But Ross, who as Commerce Secretary would lead any trade negotiations, describes a more benign approach. On Mexico, he points out that the United States accounts for 80% of Mexican exports, which gives the United States plenty of leverage to lean on its southern neighbor to buy more American-made products. “If I’m a guy’s 80% customer, is he going to fight with me?” Ross says. “No, he’s going to negotiate.”
The goal, he says, wouldn’t be to punish US companies that produce goods in Mexico, but to reduce America’s $60 billion trade deficit with Mexico. That can be done two ways: by Mexico exporting less to the United States or buying more from it. Either could be accomplished, he says, without dismantling the North American Free Trade Agreement
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And, we end up with a weird situation, Mexico leads the Southwest in negotiations with the Yawkers, Mexico has to represent the tri-lateral arrangement. 

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