2 ms·
Others have explained why trade deficits are not necessarily bad. But even if it were bad to run a trade deficit and you wanted to fix that, it would be trade
by tzs 2y ago
Others have explained why trade deficits are not necessarily bad.
But even if it were bad to run a trade deficit and you wanted to fix that, it would be trade as a whole that you would need to balance. In your trade with individual countries it would be OK to have deficits with some as long as you had surpluses with others as long as it was balanced as a whole.
Different countries have different goods to offer and different goods they need. It is not just realistic to expect that for every country what we have to sell that they want to buy and what they have to sell that we want to buy will end up being the same value.
There will be a lot of circular trade situations. Country A wants to sell good 1 and buy good 2. Country B wants to sell good 2 and buy good 3. Country C wants to sell good 3 and buy good 1.
If these countries all want trade to be balanced with each of their partners none can trade. But if they just all just want to balance their total trade then A can run a trade surplus with C and a trade deficit with B. Similar for B and C.