… is from page 2 my former Mercatus Center colleague Dan Griswold’s April 2023 paper with Andreas Freytag, “Balance of Trade, Balance of Power: How the Trade Deficit Reflects U.S. Influence in the World“:
The [U.S. trade] deficit is not a symptom of weakness in manufacturing or the overall economy, or of unfair trade practices abroad, but a manifestation of underlying strength, enhancing U.S. “soft power” in the world during a time of rising tension with global rivals such as Russia and China.
DBx: This visual shows per-country inflows, in 2019, of foreign direct investment (FDI). Every dollar of FDI that flows into the U.S. makes the U.S. trade deficit larger than it would otherwise be. I wonder how many are the people who, with one breath, sincerely wish good luck to governors of U.S. states and mayors of U.S cities who travel abroad to encourage foreigners to invest in their locales, and then, in the next breath, bemoan U.S. trade deficits and demand that Washington do something to reduce these so-called ‘deficits.’
