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Trade imbalances typically solve themselves because they force currency changes, if I have too many Y$ because I sell more to country Y than I buy then I can't
by Taniwha 1y ago
Trade imbalances typically solve themselves because they force currency changes, if I have too many Y$ because I sell more to country Y than I buy then I can't use them easily and they become worth less, that means Y's exporters get more Y$ when they sell stuff and importers pay more - trade deficits balance out.
If you have a currency that's needed for something like buying a staple like oil from other than that country then that $$ is worth more, is artificially high, and that country will tend to always have trade deficits
It's very much a case of "you can't have your cake and eat it too" - it also means that Trump's tariffs are very much an incentive for the rest of the world to get off of the US oil $