| There are many factors and points of view on economics. This article is to give people a quick understanding of the issues they should be taking into consideration when deciding public policy regarding trade with people or governments outside of America. Often, people will force themselves to only look at the economic points on the side they want to win or the side their favorite politicians favor. At the beginning of writing this article, I was 99% free trade; however, after considering all the issues I brought up, I see validation of a few good reasons for tariffs. I move to 95% free trade. The 5% is entirely regarding putting pressure on bad government leadership in other countries to treat their people better, to stop terrorism, or to change their policies that do great harm. |  |
There is not a trade deficit
 | First, trade deficits only exist when accountants leave out information on the spreadsheet. When all the information is accounted for, there is not a trade deficit. All trades are equal! The buyer and seller come to an agreement on price and product; thus, the two sides agree they are identical in value. Both sides believe they are better off with the trade; however, every agreement defines equal. The seller receives the exact amount that the buyer paid, thus identical value. A tax is a fee that has to be paid, similar to transportation cost; however, does not take away equality. An agreement on trade is typically currency for product, and that is where some people define a deficit. Their mistake is that they only look at products and not cash. Cash is something of real worth, creating real equality with the traded products. It would be wise to adopt a better Monetary Policy as defined in Haley2024 the Movement. |
| Another significant cause of an apparent trade deficit is that foreigners buy items that remain in America. Many accountant’s separate foreigners buying products to send back to their country with products they buy that remain in America. If Americans buy $100 billion of products from China and ship 100% of the products to America, there is equal trade because China has $100 billion, and Americans have $100 billion of merchandise. If China takes that $100 billion and buys $100 billion of products from America, again, there is equal trade. However, if $50 billion of the $100 billion of product was shipped back to China and $50 billion was used to buy factories in America; the accountants would list that as a $50 billion trade deficit because the products (factories) did not leave America. |  |
 | This is done by having China companies directly building a factory or through buying stocks. China or the people of China buying stocks and bonds in America directly means that those dollars buy American products and American labor. The Money China uses to buy a municipal road bond is used to hire Americans to build the road. China is using the money Americans sent them in exchange for their products to purchase American goods and labor. The money China spends that stays in America is on the investment side of the balance sheet and directly and exactly matches the ‘trade deficit.’ |
| Which side of the ocean would you want to be on, shipping away $100 billion of products and only receiving ships with $50 billion of products or the reverse? On top of the disparity of product, America and Americans also obtain a net gain of $50 billion of investment that leads to higher productivity, better infrastructure, and a better standard of living for Americans. Too many Americans see the trade deficit as lost money, in fact, it directly means more capital in America without having to reduce consumption. China is getting the raw deal, less product, and fewer investments, thus lower quality of life. |  |
Money must come back to U.S.
 | Many people will be concerned with a trade deficit with a specific country versus looking at overall results. If America buys $10 billion of products from China and then China takes 10 billion US dollars to buy products from Australia, and then Australia buys $10 billion of products from America, everything balances. With about 180 countries in the world, the complexity is truly multifaceted. People of one country save money in the currency of another country. Mutual funds group stocks from hundreds of companies from around the globe and allow anyone in the world to buy into the mutual fund. Tourism can cause significant complications to determine how much each country is buying from the other. The supply chain and employees for many big global corporations are genuinely complex and very difficult to accurately factor trade issues out. Over time and in the end, all the money must come back to Americans or foreigners give Americans a gift of shipping U.S. products and not asking for products in exchange. |
A big factory in a small town
| There is often joy from local leaders and citizens of a locality that lands a big factory. That factory represents a considerable trade deficit to that city. Trade deficits are always precisely offset by an investment surplus. A big $30 million factory is a significant investment surplus; therefore, also representing a trade deficit. Trying to work out the complexity of trade deficits is undoubtedly more difficult for a city because 99% of products are transported in from outside the city to build the factory as well as raw material to build the products. Depending on many factors, employees also travel in from nearby localities. 99% of the product also is shipped out of the city. The issue here is to demonstrate that investments coming into your geographic area, which is an investment surplus, is beneficial to the people in the geographic area. |  |
