alt Hacker NewsA current account deficit is a capital account surplus. Persistent deficits shift the balance between Asset vs Export sectors, dumping the export sector and pumping the asset sector. Put differently, we can pay for imports with shit that we make or shit that we own -- and this has implications for people in our country who make shit vs own shit.
A better analogy for the trade deficit would be sitting on the couch slamming potato chips and observing the shift in our body away from muscles and towards fatty tissue. Should we be excited to see this example of specialization in action? Is it wrong to want to fix our diet and push our body composition in the opposite direction?
https://yalebooks.yale.edu/book/9780300261448/trade-wars-are...
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Your framing is ridiculous. Canada sends raw materials to the USA and purchases it back once transformed. If anyone has been bleeding it is Canada.
Yes, by all means, figure out how to reshore American production of potash, aluminum and heavy crude near northern refineries.
It's just an immensely dumb policy.
Unless we plan on manufacturing our own shoes and clothes, competitive advanced manufacturing is going to require cheap industrial inputs from around the world.
I think the whole trade deficit argument to be beyond stupid.
1. Sending machinery, food, equipment in exchange of pieces of paper with national heroes printed on them should make you think who's benefitting really from the deficit
2. This is the 21st century, you can't ignore services. How many Office and Adobe licenses, credit card transactions, Netflix subscriptions, Hollywood movies and shows, advertisement space online, US companies sells and it doesn't enter the trade argument?
Put differently, Trump is explicitly attempting to destroy the reason the American stock market generally goes up.
It’s reasonable to want to bring back american manufacturing. But the random, temper-tantrum, market-manipulation tariffs are not going to do that. America isn’t going to all of a sudden produce tonnes and tonnes of xmas decorations every year just because of a 50% tariff on all chinese goods that may or may not be around in 6 months. All that’s going to happen is xmas decorations are going to be more expensive.
An actual plan would be targeting specific industries where america has the ability to scale up, and having congress pass tariffs that slowly ramp up over time to allow a smooth transition.