Why does the U.S. always run a trade deficit? • Hacker News Board

Re: Why does the U.S. always run a trade deficit?

#371

Post by JSteph22 » Wed, May 21, 2025, 1:03 AM UTC

pirate787 wrote: post #223

bumby wrote: post #200

Earlier quoted context omitted.

> However, it's arguably a better export that commoditized goods, from a margin standpoint. Importantly, this is the same dynamic that causes economies to move away from manufacturing towards service-oriented economies. Capitalism is going to chase higher margins, but there should be guardrails that mitigate the negative externalities of such behavior. Else we are left with an eroded middle class, lack of supply chai…

The US is manufacturing more than ever and is the second largest manufacturer in the world after China. The US middle class has actually "eroded" upwards -- our wealthiest population cohort has tripled in the last thirty years.

A significant portion of the trade deficit is due to heavily discounted Canadian crude imports that American oil refineries refine and resell domestically and internationally at a large markup that brings in massive revenues.

American lobbying has to date successfully prevented Canada from building up its refinery capacity. Now that Trump doesn't seem to like this arrangement, Canada will likely simply stary refining its own crude.

This will definitely reduce the US trade deficit but may not be good overall for the American economy.

The blanket generalization that all trade deficits are subsidies is flat out wrong. You need to look into the details to determine whether a given trade arrangement is beneficial for the US or not.

Re: Why does the U.S. always run a trade deficit?

#372

Post by grayfaced » Wed, May 21, 2025, 1:06 AM UTC

hunglee2 wrote: post #301

mrtksn wrote: post #115

Earlier quoted context omitted.

US doesn't just get political influence. It gets massive amounts of products and services enabling the US residents live well beyond their means. China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers. US is definitely not the victim here. There's the risk of this system stop wor…

Indeed true - US is 4% of the global population but 25% of the global consumption, if not more. You can see this via the eyeball test - everything is bigger: cars, houses, even the people. US invented 'overproduction' to smear Chinese manufacturing, but did not consider the other side of the coin, which is US 'overconsumption'. Two to tango etc

Wouldn't it be more apt to compare consumption vs production. It looks like US is about 26% of global GDP from a quick google. But I'm also suspect of comparing GDP's across nations that have very different methodologies.

Also services are counted there, so it's likely we're exporting services in exchange for manufactured products.

Re: Why does the U.S. always run a trade deficit?

#373

Post by ikiris » Wed, May 21, 2025, 1:07 AM UTC

treis wrote: post #254

chris_va wrote: post #191

The author seems to gloss over the economy not being a zero sum game. As an example, since this is HN: the US creates a ton of startups. Any country that creates new businesses is going to see foreign investment, which on paper leads to a trade deficit. Essentially, the US exports businesses to the rest of the world, but that is not tallied in a 19th century model for the trade balance of goods. However, it's arguabl…

Exporting business ownership when seen on a national level is just another form of debt. You're trading future production for stuff now. The fundamental problem is that the balance of goods flows into the US today. If debts and profits are going to be paid out eventually that will have to reverse. But it's going to be politically impossible for the US to ever send out 5-10% of its GDP in goods. That's the fundamental…

If I buy an apple from an orchard with money, I haven’t indebted myself an apple man. I got a real product for effectively an iou that everyone pretends has value and that orchard can trade to someone else for fertilizer. You have the entire concept backwards.

Re: Why does the U.S. always run a trade deficit?

#374

Post by ikiris » Wed, May 21, 2025, 1:12 AM UTC

palmotea wrote: post #341

goatlover wrote: post #328

Earlier quoted context omitted.

A sustained conflict with a nuclear power is a no go. The risk of nuclear escalation is too great.

> A sustained conflict with a nuclear power is a no go. The risk of nuclear escalation is too great. That was the rationale for letting the US military get into this state, but the conflict in Ukraine proved it to be unwise and founded on false assumptions.

When did the us join that conflict and when did it run out of tanks?

Re: Why does the U.S. always run a trade deficit?

#375

Post by 8note » Wed, May 21, 2025, 1:12 AM UTC

jandrewrogers wrote: post #212

actionfromafar wrote: post #132

Earlier quoted context omitted.

Even more sad that the US chose NOT to invest this surplus, for instance in infrastructure, education and a sensible health system.

The US spends $1T on education. It is extremely difficult to justify spending more when the US already spends far more per student than other developed countries. Same with infrastructure and healthcare. Without accountability for where that money went it would be foolish to throw even more money at it. Also, in the US, infrastructure, education, and healthcare is primarily the responsibility of individual States, so…

is that trillion with some PPP correction or without?

Re: Why does the U.S. always run a trade deficit?

#376

Post by throttlebody » Wed, May 21, 2025, 1:14 AM UTC

fennecbutt wrote: post #312

hunglee2 wrote: post #35

Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…

Plus one thing that was never really mentioned during the tariff bs where many American republicans demonstrated a total lack of understanding of what tariffs are and how they work is: The fact that, yes, China makes iPhones and America has to import them. However that completely ignores the fact that China is making iPhones for _Apple_ and that whilst I'm sure the Chinese factories make a little profit, Apple's is m…

A lot of corporate US does not declare their earnings in the US, but in tax heavens, thus further skewing the figures.

Re: Why does the U.S. always run a trade deficit?

#377

Post by materielle » Wed, May 21, 2025, 1:16 AM UTC

hunglee2 wrote: post #35

Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…

> At the expense of hollowing out domestic industry

This doesn’t seem obvious to me. Trade happens because it mutually beneficial.

The counter factual to reducing trade isn’t that we would manufacture the equivalent amount of goods here and be just as rich.

It’s that we would be poorer. And certain goods would cease to exist, and all of us would have to learn to live with less because it’s simply infeasible to manufacture everything here.

Re: Why does the U.S. always run a trade deficit?

#378

Post by JackYoustra » Wed, May 21, 2025, 1:20 AM UTC

hunglee2 wrote: post #35

Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…

> running a deficit in physical goods traded

This is not a disadvantage. By your own admission: we send dollars overseas in exchange for goods. We never have to actually send goods of our own. We effectively get them for the price of printing dollars, so effectively free.

Re: Why does the U.S. always run a trade deficit?

#379

Post by JackYoustra » Wed, May 21, 2025, 1:21 AM UTC

burnt-resistor wrote: post #359

Trade deficit are sales envy. Value is exchanged. There is nothing wrong except the empire's unlimited greed to have it all.

it's not greed! It's just being dumb. If the empire wanted it all they'd try and enforce this state of affairs and have an infinite trade deficit in exchange for nothing (/ dollar exporting).

Re: Why does the U.S. always run a trade deficit?

#380

Post by JackYoustra » Wed, May 21, 2025, 1:22 AM UTC

cryptonector wrote: post #363

> Using national accounting, one can show deficits are also due to a persistent shortfall in domestic saving that requires funds from abroad to finance domestic investment spending. But which is the cause, and which is the effect?

The cause is persistent shortfall in domestic saving and the effect is using abroad dollars to finance spending.

The cause starts from both micro agents secularly deciding to spend more than save and from the government making law large deficits (a large source of not saving).