No comment on Trump's view but meanwhile what going to happen to the 1$trillion trade deficit? How long can that reality be denied? Is that a sustainable position? I'm an economic ignoramus so I just curious as what knowledgeable people think about this.
So let me get this straight: a bunch of foreign countries send you mega-ship loads of goods, and all they get back in return is paper. How is this a bad thing?
My trade deficit with Amazon, Target, Walmart, etc. is in the many tens of thousands of dollars. When are those freeloaders going to start paying me for a change?
Trade deficits are sustainable indefinitely when foreign countries want to hoard your currency. The only reason countries would want to stop hoarding dollars is if the US gov does something stupid like start a trade war
People are certainly aware of the trade deficit. A trade deficit is not a bad thing.
- A growing trade deficit can reflect a robust economy. As U.S. consumers and businesses increase spending, imports rise, leading to a higher trade deficit. Simultaneously, higher U.S. interest rates attract foreign investment, strengthening the dollar and making imports more affordable.
- The U.S. trade deficit is counterbalanced by a capital account surplus, meaning foreign entities invest heavily in U.S. assets. This influx of capital supports economic growth, funds government debt, and contributes to job creation, particularly in sectors like manufacturing.
- Trade deficits allow U.S. consumers access to a wide array of affordable foreign goods. This access enhances purchasing power and living standards. Moreover, U.S. firms benefit from importing competitively priced intermediate goods, boosting productivity and innovation.
- While the U.S. often has a goods trade deficit, it maintains a surplus in services, including finance, education, and technology. This surplus offsets the goods deficit and underscores the U.S.'s competitive advantage in high-value service sectors.
Wikipedia
- The U.S. dollar's status as the world's primary reserve currency enables the country to run trade deficits without immediate financial repercussions. Foreign nations hold dollars to facilitate international trade, which supports U.S. borrowing and spending capabilities.
- Concerns that trade deficits lead to job losses, especially in manufacturing, are often overstated. Research indicates that factors like automation and technological advancements have a more significant impact on employment trends than trade deficits.
- Trade deficits foster global economic interdependence, which can enhance diplomatic relations and geopolitical stability. By being a major importer, the U.S. strengthens its ties with exporting countries, promoting mutual economic interests.
While trade deficits can present challenges, they also offer benefits that contribute to the U.S. economy's dynamism and resilience. It's essential to consider the broader economic context rather than viewing trade deficits in isolation.
> While the U.S. often has a goods trade deficit, it maintains a surplus in services, including finance, education, and technology
Maybe a naive question, but are only goods considered? I had always assumed the 'deficit' was "money in minus money out", and thus selling services, etc. would be included in it.
Others have explained why trade deficits are not necessarily bad.
But even if it were bad to run a trade deficit and you wanted to fix that, it would be trade as a whole that you would need to balance. In your trade with individual countries it would be OK to have deficits with some as long as you had surpluses with others as long as it was balanced as a whole.
Different countries have different goods to offer and different goods they need. It is not just realistic to expect that for every country what we have to sell that they want to buy and what they have to sell that we want to buy will end up being the same value.
There will be a lot of circular trade situations. Country A wants to sell good 1 and buy good 2. Country B wants to sell good 2 and buy good 3. Country C wants to sell good 3 and buy good 1.
If these countries all want trade to be balanced with each of their partners none can trade. But if they just all just want to balance their total trade then A can run a trade surplus with C and a trade deficit with B. Similar for B and C.
Probably pretty sustainable. If the US was financing it by selling off its assets and running out then that would be unsustainable but the US is cranking out assets like nobody's business.
As an example Tesla the company didn't exist 30 years ago. Say you got some shares early you can sell those to the Chinese in return for their widgets. That kind of thing can go on and on.
Trade deficit is a partial view of matters, and may not mean much anyway. It's a partial view in that there are a bunch of things it doesn't cover like inward investment. And it may not mean much in the same way my household runs a trade deficit with the local shop, which I have sustained for decades with no obvious ill effect beside my waistline.
Respectfully, have you confused 'trade deficit' and 'budget deficit' similar to Trump? Being a net importer is not the same as having the governments outlays exceed it's inlays.
Conservatives rightly used to be concerned about budget deficits -- but trade deficits are entirely different. Just because they share the same word does not necessarily mean they are the same indicator.
I would be happy to see America as a net exporter, but I genuinely have to ask ... what is it that America - the richest country in the world - is going to make that other people want regularly aside from mass agriculture, specialized services, and advanced manufacturing??
Our domestic manufacturing base is thankfully not geared to produce a bunch of plastic crap to try to compete with China. And if you want to onshore critical supply chains -- great -- but again that has nothing to do with the idea of a trade deficit.
Genuinely looking for a thoughtful engagement here
> Conservatives rightly used to be concerned about budget deficits
Consevratives used to (and still do) talk about budget deficits to derail conversations about programs they are opposed to but which are too popular to directly attack, but—then and now—continued to run up massive deficits on their own priorities, including shifting tax burden off of their wealthy benefactors.
If conservatives worried about budget deficits, they would make them smaller. As it happens, budget deficits go up under conservative governments more then under democratic ones.
It just so happen that tax breaks and military cost much more money then what they pretend save.
