Continuing My Open Correspondence with Trump

by Don Boudreaux on January 25, 2018

in Balance of Payments, Myths and Fallacies, Trade

25 January 2018

Mr. Donald Trump
1600 Pennsylvania Ave., NW
Washington, DC 20500

Mr. Trump:

ABC News reported this morning that while in Davos you will encourage other countries to invest in the United States.

I’m pleasantly surprised!  Foreign investment in the United States is indeed splendid for us Americans.  But such investment also increases America’s trade deficit – a phenomenon that you’ve famously pledged to reduce.

Have you changed your mind about the trade deficit?  Will we hear no more of the economically ignorant squawking about the alleged horrors of the trade deficit that, until now, issued routinely from you and your administration?  Or – pardon my asking – do you simply not understand that every cent that foreigners invest in America is a cent that foreigners don’t spend on American exports and, hence, is a cent that raises America’s trade deficit?

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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