[Serious] Why is trade deficit bad? Especially in the case of US trading in dollars, doesn’t it mean that a country exchanges foreign goods for own currency that it has complete control over?
[Serious] Why is trade deficit bad? Especially in the case of US trading in dollars, doesn’t it mean that a country exchanges foreign goods for own currency that it has complete control over?
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Because no one has complete control over the value of a currency but the currency is a representation of their worth as a force in the world. For the past 50+ years the US has stepped down from things like manufacturing and resource development in favor of mostly production (for things that are then manufactured in other countries) and trade. The dollar is the most common global currency because the US facilities most global trade. But when the merchant middleman decides to start charging everyone more then they’ll just use different boats. Like say a pizza place uses DoorDash even though they have their own drivers because more people have the DoorDash app, then DoorDash decides to charge the pizza place $5 for every $20 worth of food delivered? Do you think they’re going to keep using DoorDash? That’s why DoorDash adds fees to the customer and not the supplier.
It’s not. Do republicans and uninformed people really think Trump and his team understand trade/economics better than Reagan and Bush? Canada is so powerful that it strong-armed the US into unfavorable agreements twice? Come on OP, do a little critical thinking and research before you ask a question this stupid.
A trade deficit is not necessarily bad. There’s pros and cons. It means you have a strong currency, which means foreign goods are relatively cheap. Purchasing power of consumers buying imported goods (as well as corporations importing materials from overseas) is strong. That’s obviously a pro.
The downside is that it can make it hard for local producers to compete with overseas producers. This can lead to high unemployment as jobs get outsourced to places where labor is cheaper, and entire industries can end up moving out of the country in order to stay competitive.
While employment is high and GDP growing, there’s not much reason to worry about the downside. The US is currently getting a lot of benefits from its strong currency, and employment and growth are strong, so in its case the trade deficit is a good thing.
Because the world reserve currency is the dollar, which the US issues.
So it can simply print dollars and buy anything it needs from any other country.
It’s not bad. Imagine you are an alien species. You fly here and discover that one country is making all sorts of awesome things for another company and receiving in return paper. Who would you assuming is "winning" in that scenario?
In my opinion, it’s not necessarily bad as far as trade goes, but dangerous for long time national security. Imagine we rely on the rest of the world to produce all the things we need, and then a large scale civil unrest happens. That could leave us in a pretty bad spot. It’s much safer long term to be more self reliant. You can have your own opinion on whether being globally reliant is good or bad, but that’s mine.
It’s not. If everyone gets what they need and can afford it, then everyone’s a "winner." It doesn’t matter if one side imports or exports significantly more or less. But Trump doesn’t understand that because he sees every human interaction as entirely transactional.