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A current account deficit is a capital account surplus. Persistent deficits shift the balance between Asset vs Export sectors, dumping the export sector and pum

A current account deficit is a capital account surplus. Persistent deficits shift the balance between Asset vs Export sectors, dumping the export sector and pumping the asset sector. Put differently, we can pay for imports with shit that we make or shit that we own -- and this has implications for people in our country who make shit vs own shit. A better analogy for the trade deficit would be sitting on the couch slamming potato chips and observing the shift in our body away from muscles and towards fatty tissue. Should we be excited to see this example of specialization in action? Is it wrong to want to fix our diet and push our body composition in the opposite direction? https://yalebooks.yale.edu/book/9780300261448/trade-wars-are-class-wars/ https://yalebooks.yale.edu/book/9780300261448/trade-wars-are...

inigyou 2mo ago
Put differently, Trump is explicitly attempting to destroy the reason the American stock market generally goes up.
- smallmancontrov 2mo ago
  Yes, but I'm pretty sure he doesn't know that and thinks flapping between protectionism and TACO is a brilliant strategy for achieving the best of both worlds rather than an idiotic strategy guaranteed to result in the worst of both worlds. "Destroy American affluence so that we can't pay with assets instead of exports" is probably the worst conceivable way to unwind the exorbitant privilege of the American Economy. We could have spent that money helping people, instead we spent it on wars and tax breaks for billionaires. We could have spent that money on targeted industrial policy (the IRA and CHIPS acts under Biden were examples of this done right, just not at the scale we needed) but instead we are doing it the hard way. Sigh.
- Shiggy_ 2mo ago
  That is not what the user above you said. They're explicitly pointing out that the US (and most of the western world) has abandoned the manufacturing sector of their economy, outsourcing work that used to employ millions of people to the developing world. This is a trade-off that can benefit both countries, but, it is wise to consider both WHO benefits from this, and what the LONG-TERM implications of this entails. It's great for an investor class in America that has the capital to create factories in China, and it's great for China to take USD and start to employ their workforce. But, the question is whether or not this is actually a good thing for the American worker. The rust-belt would certainly have an opinion on this. My father was a factory worker that was able to support a family on a single income, and when that manufacturing plant closed, it absolutely destroyed the finances of my family.
  - teachrdan 2mo ago
    This is a false dichotomy. I personally believe that strategic tariffs should be used to protect our national interests, including providing meaningful employment. This administration has no interest in strategic tariffs. Instead, they are made overbroad (50% on everything from Canada vs, say, cheap imported steel) and they are made and removed capriciously (tariffs on English whisky dropped after King Charles' visit to the White House). If Trump really wanted to bring your dad's factory job back, he'd specifically target whatever industry he was working in AND ideally spend the tariff money boosting that industry. This is precisely the strategy countries like Japan used to reach first world status. Instead Trump uses tariffs like a cudgel -- much closer to what the XKCD comic depicts. There is no chance his tariffs will lead to your father's factory ever being reopened, as that would require, at the bare minimum, a tariff that investors know will stay in place for years, as opposed to one that could be lifted with the visit of a charismatic member of nobility.
    - peezd 2mo ago
      [...wanted to bring your dad's factory job back, he'd specifically target whatever industry he was working in AND ideally spend the tariff money boosting that industry.] Which was more or less the intent of the CHIPS and Science Act for the semiconductors industry.
      - edgyquant 2mo ago
        The chips act used tax dollars and subsidies to incentivize companies to build here. This and tariffs on semis are not much different the only difference is with a tariff you only pay the tax when you buy imported goods
        kasey_junk 2mo ago
        Tariffs are much more regressive than our normal tax policy. Which is probably the reason this administration prefers them.
        inigyou 2mo ago
- pessimizer 2mo ago
  Yes, and this is good. The American stock market going up benefits 10% of the US population. The US has the highest share of revenue going to owners than it ever has in history. We've left behind the Gilded Age. https://libertystreeteconomics.newyorkfed.org/2026/06/the-post-covid-decline-in-the-labor-share/ https://libertystreeteconomics.newyorkfed.org/2026/06/the-po...
  - otterley 2mo ago
    Where are you getting this 10% number? 54.3% of US households held a retirement account in 2022. https://www.federalreserve.gov/publications/files/scf23.pdf https://www.federalreserve.gov/publications/files/scf23.pdf
    - quickthrowman 2mo ago
      The top 10% of wealth holders own 90% of stocks. The other 90% of people not in the top 10% own the remaining 10%.
deleted 2mo ago
[deleted]
kennywinker 2mo ago
It’s reasonable to want to bring back american manufacturing. But the random, temper-tantrum, market-manipulation tariffs are not going to do that. America isn’t going to all of a sudden produce tonnes and tonnes of xmas decorations every year just because of a 50% tariff on all chinese goods that may or may not be around in 6 months. All that’s going to happen is xmas decorations are going to be more expensive. An actual plan would be targeting specific industries where america has the ability to scale up, and having congress pass tariffs that slowly ramp up over time to allow a smooth transition.
- epolanski 2mo ago
  > It’s reasonable to want to bring back american manufacturing. Capitalism produces where it is convenient to do so. And no politician can change it. You can try to protect very few critical sectors, but not whole "manufacturing" which by the way keeps rising in US since ever. What politicians want to sell is the "good old times of well paying manufacturing jobs". Robots have long come for those.
  - close04 2mo ago
    Capitalism is great as long as it works just for you. When others learn to play the game and even outrun you, it’s time to put the finger on the scales. Essence of the free market.
    - epolanski 2mo ago
      There isn't much you can do about it, you can't have the cake and eat it too. If you want to protect your whole "manufacturing", you also need to make peace with the idea that consumer and industrial prices will balloon. You can only compete, choose your battles, but you can't live in a world that does not exist.
      - smallmancontrov 2mo ago
        No, bringing the price of 50" 4k TVs down to $300 does not make up for lost jobs. That's an easy choice, which is why it was never presented to the American worker but rather foisted upon us by shareholders in pursuit of profit and a government content to look the other way.
xutopia 2mo ago
Your framing is ridiculous. Canada sends raw materials to the USA and purchases it back once transformed. If anyone has been bleeding it is Canada.
- x0x0 2mo ago
  And for aluminum in particular, the US is essentially importing dirt-cheap hydro energy.
- morkalork 2mo ago
  Yes. And everyone that's pointed it out in the past go shouted down for one reason or another. Sending oil down south and buying refined gasoline back is asinine. Same with raw timber to buy back finished products. And now that the national-security chickens have come home to roost, it's waaaaaaay too late.
epolanski 2mo ago
I think the whole trade deficit argument to be beyond stupid. 1. Sending machinery, food, equipment in exchange of pieces of paper with national heroes printed on them should make you think who's benefitting really from the deficit 2. This is the 21st century, you can't ignore services. How many Office and Adobe licenses, credit card transactions, Netflix subscriptions, Hollywood movies and shows, advertisement space online, US companies sells and it doesn't enter the trade argument?
- edgyquant 2mo ago
  Services can’t fight a war or feed you. A nation that wishes to be a real power must be able to guarantee it can feed and protect its people.
  - kasey_junk 2mo ago
    America can feed every person in the country easily, we import luxury goods cause we like coffee and out of season vegetables not because we’ve lost the production capability. If anything we are over subsidizing calories. We also have enough nukes to glass the surface of the planet, enough firearms for every man woman and child to dual would them and 7x the rest of the worlds military. The US’s people don’t need protection from other nations we need protection from each other.
  - pessimizer 2mo ago
    Also, America has no advantage in services. Americans aren't any smarter than anyone else. America has a lot of land, highways, and infrastructure - that's actual advantage. So we're just letting that rot or selling it to overseas oligarchs.
    - otterley 2mo ago
      We may not be “smarter” than others but our culture, which prioritizes innovation and creativity, makes us comparatively better at inventing goods and services that people want to buy.
  - 2mo ago
Hammershaft 2mo ago
It's just an immensely dumb policy. Unless we plan on manufacturing our own shoes and clothes, competitive advanced manufacturing is going to require cheap industrial inputs from around the world.
guyzero 2mo ago
Yes, by all means, figure out how to reshore American production of potash, aluminum and heavy crude near northern refineries.
mcmoor 2mo ago
Yeah the comic seems to imply that tariffs are always always bad. Which maybe what's in mind for free trade absolutists, but is certainly not my opinion. Current administration may wield it very horribly, but it's still a useful tool. Another analogy that's in my mind is cancer. You certainly don't want to provide more nutrition for those literally parasitic cells.
skybrian 2mo ago
US investment markets are attractive to foreign investors for much the same reasons that they're attractive to US investors. As a result, much of the money that the US spends on imports gets invested in the US. You make that sound like a bad thing.
malshe 2mo ago
An even better analogy for the US using trade deficit as an excuse for tariffs would be a billionaire hedge fund manager complaining about payments made to his janitor. Essentially the janitor just takes money from the hedge fund manager without ever buying any financial services in return. The solution, of course, is to fire the janitor and start cleaning toilets himself.

inigyou 2mo ago

Put differently, Trump is explicitly attempting to destroy the reason the American stock market generally goes up.

smallmancontrov 2mo ago
Yes, but I'm pretty sure he doesn't know that and thinks flapping between protectionism and TACO is a brilliant strategy for achieving the best of both worlds rather than an idiotic strategy guaranteed to result in the worst of both worlds. "Destroy American affluence so that we can't pay with assets instead of exports" is probably the worst conceivable way to unwind the exorbitant privilege of the American Economy. We could have spent that money helping people, instead we spent it on wars and tax breaks for billionaires. We could have spent that money on targeted industrial policy (the IRA and CHIPS acts under Biden were examples of this done right, just not at the scale we needed) but instead we are doing it the hard way. Sigh.
Shiggy_ 2mo ago
That is not what the user above you said. They're explicitly pointing out that the US (and most of the western world) has abandoned the manufacturing sector of their economy, outsourcing work that used to employ millions of people to the developing world. This is a trade-off that can benefit both countries, but, it is wise to consider both WHO benefits from this, and what the LONG-TERM implications of this entails. It's great for an investor class in America that has the capital to create factories in China, and it's great for China to take USD and start to employ their workforce. But, the question is whether or not this is actually a good thing for the American worker. The rust-belt would certainly have an opinion on this. My father was a factory worker that was able to support a family on a single income, and when that manufacturing plant closed, it absolutely destroyed the finances of my family.
- teachrdan 2mo ago
  This is a false dichotomy. I personally believe that strategic tariffs should be used to protect our national interests, including providing meaningful employment. This administration has no interest in strategic tariffs. Instead, they are made overbroad (50% on everything from Canada vs, say, cheap imported steel) and they are made and removed capriciously (tariffs on English whisky dropped after King Charles' visit to the White House). If Trump really wanted to bring your dad's factory job back, he'd specifically target whatever industry he was working in AND ideally spend the tariff money boosting that industry. This is precisely the strategy countries like Japan used to reach first world status. Instead Trump uses tariffs like a cudgel -- much closer to what the XKCD comic depicts. There is no chance his tariffs will lead to your father's factory ever being reopened, as that would require, at the bare minimum, a tariff that investors know will stay in place for years, as opposed to one that could be lifted with the visit of a charismatic member of nobility.
  - peezd 2mo ago
    [...wanted to bring your dad's factory job back, he'd specifically target whatever industry he was working in AND ideally spend the tariff money boosting that industry.] Which was more or less the intent of the CHIPS and Science Act for the semiconductors industry.
    - edgyquant 2mo ago
      The chips act used tax dollars and subsidies to incentivize companies to build here. This and tariffs on semis are not much different the only difference is with a tariff you only pay the tax when you buy imported goods
      - kasey_junk 2mo ago
        Tariffs are much more regressive than our normal tax policy. Which is probably the reason this administration prefers them.
      - inigyou 2mo ago
pessimizer 2mo ago
Yes, and this is good. The American stock market going up benefits 10% of the US population. The US has the highest share of revenue going to owners than it ever has in history. We've left behind the Gilded Age. https://libertystreeteconomics.newyorkfed.org/2026/06/the-post-covid-decline-in-the-labor-share/ https://libertystreeteconomics.newyorkfed.org/2026/06/the-po...
- otterley 2mo ago
  Where are you getting this 10% number? 54.3% of US households held a retirement account in 2022. https://www.federalreserve.gov/publications/files/scf23.pdf https://www.federalreserve.gov/publications/files/scf23.pdf
  - quickthrowman 2mo ago
    The top 10% of wealth holders own 90% of stocks. The other 90% of people not in the top 10% own the remaining 10%.

deleted 2mo ago

[deleted]

kennywinker 2mo ago

It’s reasonable to want to bring back american manufacturing. But the random, temper-tantrum, market-manipulation tariffs are not going to do that. America isn’t going to all of a sudden produce tonnes and tonnes of xmas decorations every year just because of a 50% tariff on all chinese goods that may or may not be around in 6 months. All that’s going to happen is xmas decorations are going to be more expensive. An actual plan would be targeting specific industries where america has the ability to scale up, and having congress pass tariffs that slowly ramp up over time to allow a smooth transition.

epolanski 2mo ago
> It’s reasonable to want to bring back american manufacturing. Capitalism produces where it is convenient to do so. And no politician can change it. You can try to protect very few critical sectors, but not whole "manufacturing" which by the way keeps rising in US since ever. What politicians want to sell is the "good old times of well paying manufacturing jobs". Robots have long come for those.
- close04 2mo ago
  Capitalism is great as long as it works just for you. When others learn to play the game and even outrun you, it’s time to put the finger on the scales. Essence of the free market.
  - epolanski 2mo ago
    There isn't much you can do about it, you can't have the cake and eat it too. If you want to protect your whole "manufacturing", you also need to make peace with the idea that consumer and industrial prices will balloon. You can only compete, choose your battles, but you can't live in a world that does not exist.
    - smallmancontrov 2mo ago
      No, bringing the price of 50" 4k TVs down to $300 does not make up for lost jobs. That's an easy choice, which is why it was never presented to the American worker but rather foisted upon us by shareholders in pursuit of profit and a government content to look the other way.

xutopia 2mo ago

Your framing is ridiculous. Canada sends raw materials to the USA and purchases it back once transformed. If anyone has been bleeding it is Canada.

x0x0 2mo ago
And for aluminum in particular, the US is essentially importing dirt-cheap hydro energy.
morkalork 2mo ago
Yes. And everyone that's pointed it out in the past go shouted down for one reason or another. Sending oil down south and buying refined gasoline back is asinine. Same with raw timber to buy back finished products. And now that the national-security chickens have come home to roost, it's waaaaaaay too late.

epolanski 2mo ago

I think the whole trade deficit argument to be beyond stupid. 1. Sending machinery, food, equipment in exchange of pieces of paper with national heroes printed on them should make you think who's benefitting really from the deficit 2. This is the 21st century, you can't ignore services. How many Office and Adobe licenses, credit card transactions, Netflix subscriptions, Hollywood movies and shows, advertisement space online, US companies sells and it doesn't enter the trade argument?

edgyquant 2mo ago
Services can’t fight a war or feed you. A nation that wishes to be a real power must be able to guarantee it can feed and protect its people.
- kasey_junk 2mo ago
  America can feed every person in the country easily, we import luxury goods cause we like coffee and out of season vegetables not because we’ve lost the production capability. If anything we are over subsidizing calories. We also have enough nukes to glass the surface of the planet, enough firearms for every man woman and child to dual would them and 7x the rest of the worlds military. The US’s people don’t need protection from other nations we need protection from each other.
- pessimizer 2mo ago
  Also, America has no advantage in services. Americans aren't any smarter than anyone else. America has a lot of land, highways, and infrastructure - that's actual advantage. So we're just letting that rot or selling it to overseas oligarchs.
  - otterley 2mo ago
    We may not be “smarter” than others but our culture, which prioritizes innovation and creativity, makes us comparatively better at inventing goods and services that people want to buy.
- 2mo ago

Hammershaft 2mo ago

It's just an immensely dumb policy. Unless we plan on manufacturing our own shoes and clothes, competitive advanced manufacturing is going to require cheap industrial inputs from around the world.

guyzero 2mo ago

Yes, by all means, figure out how to reshore American production of potash, aluminum and heavy crude near northern refineries.

mcmoor 2mo ago

Yeah the comic seems to imply that tariffs are always always bad. Which maybe what's in mind for free trade absolutists, but is certainly not my opinion. Current administration may wield it very horribly, but it's still a useful tool. Another analogy that's in my mind is cancer. You certainly don't want to provide more nutrition for those literally parasitic cells.

skybrian 2mo ago

US investment markets are attractive to foreign investors for much the same reasons that they're attractive to US investors. As a result, much of the money that the US spends on imports gets invested in the US. You make that sound like a bad thing.

malshe 2mo ago

An even better analogy for the US using trade deficit as an excuse for tariffs would be a billionaire hedge fund manager complaining about payments made to his janitor. Essentially the janitor just takes money from the hedge fund manager without ever buying any financial services in return. The solution, of course, is to fire the janitor and start cleaning toilets himself.