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I always hear about tariffs but isn’t part of the trade imbalance due to corporate taxes being usually much lower outside the USA, incentivizing American compan

I always hear about tariffs but isn’t part of the trade imbalance due to corporate taxes being usually much lower outside the USA, incentivizing American companies to outsource production and keep the money abroad ?

rich_sasha 1y ago
The imbalances also conveniently exclude services, for no good reason. Europe buys more services from US than vice versa, i.e. US is a net exporter. So that reduces the trade imbalance, and substantially so.
- DarkWiiPlayer 1y ago
  > [...] for no good reason. Europe buys more services from US than vice versa [...] One could suspect, and many have, that this is the reason.
robocat 1y ago
A bigger problem is foreign investors. If foreign ownership of stock market increases by 1% that is 0.62 trillion of imports which could dominate other imports. In 2023, the total value of international U.S. imports of goods and services amounted to 3.83 trillion U.S. dollars The lovely graph in this link suggests that foreign ownership of stocks was 40% in 2019 and growing rapidly: https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreigners-and-rich-americans https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreign... The total market capitalization of the U.S. stock market stands at $62.2 Trillion (January 1, 2025) Your idea is likely irrelevant since companies would retain ownership of foreign capital. Metaphor: owning JPY or USD makes little difference. Disclaimer: not an economist. I'm extrapolating from my own experience as a New Zealander buying US stocks. I've sold 75% of my US holdings since January. Sold more since tariffs. Scaring away foreign investors might crash market but fix trade imbalance? Presumably the signal would be other stock markets going up as money shifts away from US.
- robocat 1y ago
  To add, Levine's latest missive says: Peter Navarro writes: The US cumulative trade deficits in goods from 1976 — the year chronic deficits began — to 2024 have transferred over $20tn of American wealth into foreign hands. That’s more than 60 per cent of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies..." and: [Foreigners] pump "so much money into the U.S. economy that it fuels economic vulnerabilities and crises." There is too much foreign demand to own our tech companies, so we have to reduce it, by making the tech companies’ stocks worth less.
  - robocat 1y ago
    As a New Zealander, the arguments about foreigners owning tech companies is shit. Maybe foreigners own 40% of US tech companies, but if 40% of US tech company income is coming from outside of the US then that is fair. The US got a big slice of a bigger pie due to foreign investment. That investment surely supercharged the growth of tech companies (especially via IPOs) - just like good VC can do. And meanwhile the US government is wanting to buy our businesses - and they use policy and agreements/accords to push that agenda to the benefit of the US. New Zealand sells good businesses cheaply to US and EU owners. Our government wants to give away equity and earnings. The right leaning minority party (ACT) are financial plonkers trying to sell New Zealand cheaply like a child loving a credit card. Sell NZ for some immediate income but cost us income over the years (that's the bargain you get with investors). Fine if the pie size is increased, but it isn't.
    - robocat 1y ago
      An even better article - also looking at exchange rates: https://www.grumpy-economist.com/p/tariffs-saving-and-investment https://www.grumpy-economist.com/p/tariffs-saving-and-invest...

rich_sasha 1y ago

The imbalances also conveniently exclude services, for no good reason. Europe buys more services from US than vice versa, i.e. US is a net exporter. So that reduces the trade imbalance, and substantially so.

DarkWiiPlayer 1y ago
> [...] for no good reason. Europe buys more services from US than vice versa [...] One could suspect, and many have, that this is the reason.

robocat 1y ago

A bigger problem is foreign investors. If foreign ownership of stock market increases by 1% that is 0.62 trillion of imports which could dominate other imports. In 2023, the total value of international U.S. imports of goods and services amounted to 3.83 trillion U.S. dollars The lovely graph in this link suggests that foreign ownership of stocks was 40% in 2019 and growing rapidly: https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreigners-and-rich-americans https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreign... The total market capitalization of the U.S. stock market stands at $62.2 Trillion (January 1, 2025) Your idea is likely irrelevant since companies would retain ownership of foreign capital. Metaphor: owning JPY or USD makes little difference. Disclaimer: not an economist. I'm extrapolating from my own experience as a New Zealander buying US stocks. I've sold 75% of my US holdings since January. Sold more since tariffs. Scaring away foreign investors might crash market but fix trade imbalance? Presumably the signal would be other stock markets going up as money shifts away from US.

robocat 1y ago
To add, Levine's latest missive says: Peter Navarro writes: The US cumulative trade deficits in goods from 1976 — the year chronic deficits began — to 2024 have transferred over $20tn of American wealth into foreign hands. That’s more than 60 per cent of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies..." and: [Foreigners] pump "so much money into the U.S. economy that it fuels economic vulnerabilities and crises." There is too much foreign demand to own our tech companies, so we have to reduce it, by making the tech companies’ stocks worth less.
- robocat 1y ago
  As a New Zealander, the arguments about foreigners owning tech companies is shit. Maybe foreigners own 40% of US tech companies, but if 40% of US tech company income is coming from outside of the US then that is fair. The US got a big slice of a bigger pie due to foreign investment. That investment surely supercharged the growth of tech companies (especially via IPOs) - just like good VC can do. And meanwhile the US government is wanting to buy our businesses - and they use policy and agreements/accords to push that agenda to the benefit of the US. New Zealand sells good businesses cheaply to US and EU owners. Our government wants to give away equity and earnings. The right leaning minority party (ACT) are financial plonkers trying to sell New Zealand cheaply like a child loving a credit card. Sell NZ for some immediate income but cost us income over the years (that's the bargain you get with investors). Fine if the pie size is increased, but it isn't.
  - robocat 1y ago
    An even better article - also looking at exchange rates: https://www.grumpy-economist.com/p/tariffs-saving-and-investment https://www.grumpy-economist.com/p/tariffs-saving-and-invest...