If an American firm pays for manufacturing for a Chinese firm to make something and ship it to America, and an American firm to distribute, only the price they

If an American firm pays for manufacturing for a Chinese firm to make something and ship it to America, and an American firm to distribute, only the price they pay for manufacturing and shipping count towards the trade. So the manufacture does not artificially inflate the total trade deficit. I think that all the article proposes changing is the way the total trade deficit is divided up between trading partners. However, looking at the balance of trade between a pair of countries rather than between one country and all other countries is pointless anyway. Consider the following simplified situation: there are only three countries in the world, A, B, and C, equally affluent, and they all use one currency, $. A has a trade deficit of $1 billion to B, B has a trade deficit of $1 billion to C, and C has a trade deficit of $1 billion to A. In the simplified scenario, there is no net transfer of wealth out of A, B, or C, because each has perfectly balanced trade - so there is nothing wrong with that picture. In summary, the proper solution is to look at total balance of trade per country, not to get too hung up on balances of trade between pairs of countries. The article is trying to solve a non-existent problem.