alt Hacker NewsIt's not really only about tariffs. It's about the net effect on all barriers of trade, such as currency manipulation, subsidies, regulations, etc. The formula (trade deficit / (imports * 2)) means that countries actually have to address the root of the problem and prove it before the US reduces their tariffs.
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A thought experiment. Imagine a small poor country far from the US, of 1 million people, where the average income is $3000 annually ($3 billion total household income). Imagine a factory in that country that produces shoes beloved in America.
Those shoes are so popular in America that Americans buy $1 billion of those shoes every year. In order to address the problem as stated, this hypothetical country would have to spend a third of its household income purchasing products produced in some of the highest-cost conditions in the world. To do so, they would have to shut out their local trading partners from whom they currently buy goods at prices they can afford. This would have the effect of making them even poorer.
Does this make any sense?
Having a trade surplus doesn’t mean you’re cheating.
If I make products better/cheaper than you, I’m going to sell more to you than you are to me.
Ditto if I have some valuable resource you need that represents a large share of my economy. The fact that you need my germanium more than I do doesn’t mean I’m ripping you off.