More Economics

There are a lot of people in the world and to a company everyone represents some sort of customer, either a current one, or a potential one.

Customers come in many different categories and some have money to spend and others do not.

Customers in the United States generally have had more money to spend than customers in most other countries, although not as much more as they once did.

Businesses ultimately make money by selling their product and if you make it hard to reach the people who live outside this country they will be at a disadvantage.

If you consider our relationship with China you will note that they sell much more here than we sell there despite the fact that they have a population that exceeds ours by a factor of three.

Its not that hard to explain since despite their population advantage we have a much higher per capita income level, so we can buy imported items and to a large extent they can buy less.

At least at this time.

China has a growing economy as do we, but they clearly have more growth potential than we do as they create more higher paying jobs (higher paying for them),  This means that the potential customers in China are turning into real customers at a faster and faster pace.

The United States is a much more mature economy so any increase in consumption has to be tied to increases in income.

To engage in a trade war with China at this time provides other countries, say European ones a great opportunity to exploit that growing market and disadvantages us.

Will a certain percentage of goods we import from China start being produced here?  Well unless we can find a different lower cost producer some will, but they will cost more, reducing our buying power.

Will the huge potential Chinese consumer market be filled with American goods?  Well it not as likely as it was before we started this trade war.

We all will get to pay more and will help our competitors exploit the Chinese market.

Of course we already conceded much of Asia by withdrawing from the Trans Pacific Trade Pact.

Good economics?  Not really.