Little Sympathy for U.S. Trade Deficit in Singapore
June 12, 2018–Speaking to reporters in Singapore, U.S. President Donald Trump complained that the United States “has lost $800 billion” due to its trade deficit with the rest of the world over the last couple years.
While that message may appeal to Trump supporters in the United States, it doesn’t carry much weight abroad.
Lee summed up the U.S. trade-deficit situation quite simply.
“If you are spending more than you are producing, that means you will have a trade deficit; if you’re spending less than you’re producing, that means you will save money or run a trade surplus. So America is spending more than you are producing. Why are you able to do that? Because you are the most powerful country in the world, and everybody else wants to hold U.S. dollars.”
In an interview on June 11 in an interview with CNN‘s Christiane Amanpour, Singapore Prime Minister Lee Hsien Loong said the United States took a generous approach in the post-WWII world, and he said he can understand why Americans may want to negotiate new trade deals today.
“That formula worked for America and has worked up until now,” Lee said. “Today America is a much smaller share of the world economy…. So some Americans are asking themselves, do I still have to carry this burden for the world?”
Lee suggested that while that is a legitimate question, it is a mistake to “abandon the whole system” in an effort to win every concession “without an overall world view.”
China’s Economic Growth
Lee said he thinks it is fair to renegotiate trade rules with China within a multilateral framework.
In 2001, when China entered the World Trade Organization, its economy made up about 4 percent of the world’s GDP; today, it makes up 15 percent of the world’s GDP, Lee said.
“So what was agreed then with a quite small player is now in effect with a very big player,” he said. “Therefore, there is a case to say, let’s work out a new basis.”
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