[a] trade imbalance is not an inherently bad thing. it can be a very good thing, a beneficial thing. this idea that if we buy $50bn more goods from kermeowistan every year than they buy from us that it implies that they are somehow “taking advantage” or this this is “unstainable” or negative is flatly false. it’s actually ridiculous. it ignores complex trade flows and balancing factors like “capital flows.”
people really seem to struggle with this, but it’s not that difficult. you’ll will have a large lifetime trade deficit with the grocery store. you will buy much from them. they will buy nothing from you. is this a problem for you? is it unsustainable? most people seem to sustain this beneficial grocery trade their whole lives.
why is it any different if it crosses a border or gets aggregated by nation? (spoiler alert, it’s not)
you’ll likely run a lifetime trade deficit with many countries too. you buy a BMW. that’s a deficit to germany. you run a restaurant in toledo. you have no german customers. does this fact harm you in some way? did germany take advantage of you? would it be better for you if we imposed a tax that made that BMW 25% more expensive? no, and if we do, it might create automotive jobs in the US, but the cost to do so is YOUR choice and your budget.
– El Gato Malo
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