Trade deficits are net detrimental to their nation's GDP.

Among both credible economist whuch are proponents or opposed to the concept of pure free trade, few (if any) of them refute the fact, (rather than opinion) regarding trade deficits detrimement to their nation's gross domestic product, (i.e. GDP).
Due to their nation's net balance of interational trade, the GDP of suplus trade nations were increased, and were were reduced for trade deficit nations. Economists do not refute annual trade deficits detrimental affects upon their nation's GDP and they certainly do not contend that a nation's annual trade deficits were net beneficial to the nation's GDP.

Unless a nation enjoys effectively “full employment”, trade deficits are particularly detrimental to the nation's numbers of jobs which to some extent affects wage rates. Trade deficits consequentially affect enterprises that are more sensitive to the financial conditions of wage-earning families. Respectfully, Supposn

I can't imagine why any economist would dispute that a trade deficit has a detrimental impact on GDP, given that GDP is based on a formula that includes exports minus imports. IE by definition, a trade deficit has a detrimental impact on GDP, and your post appears to be little more than a truism.

Bobo Fett, I'm pleased you believe Trade deficits are net detrimental to their nation's GDP is a truism, but I spend too many hours trying to convince others of this “truism”.

The greatest of USA's chronic annual trade greatest net financial detriment is upon wage earners and their dependents. Families dependent upon wages are among, if not the largest of USA's population segments. That why I'm among those proponents the species of Import Certificate policy that's described within the Wikipedia article of that entitled Import Certificates.

Refer to, https://en.wikipedia.org/wiki/Import_certificates

Respectfully, Supposn

Well, the only way I can think of where you can consistently run an economy with trade deficits is by increasing debt more and more. Continuous trade deficit is a sign of an economy consuming more than what it produces. Since there is no mechanism where you can keep leveraging an economy forever, without something happening to burst the bubble, the net effect should be wide fluctuations with a less than optimal long term GDP trajectory. All of this is speculatiion btw

Bobo Fett and FazendeiroBH, maybe you two guys are good poker players?

In regard to trade deficits, I've been posting for a number of years in quite a few political forums. I've never encountered people agreeing with me as soon as rode out of the chute. I'm more accustomed to responses questioning my logical reasoning and my sanity.

I consider myself to be a poor poker player. I don't want to play until I feel that I've better analyzed the game. But I also believe I shouldn't play poker because I don't think a read people very well. My children are smarter than I am.

Maybe our nation would be better off if we had more poker players rather than finance and economist people sitting on the U.S. Board of the Federal Reserve? I don't think they really run our economy, but I'm grateful they haven't yet completely destroyed it. If you make enough decisions, you're bound to make some bad ones, but our nation's still doing business.

Very respectfully, Supposn

Run a Deficit so the value of your currency goes down. This benefit could be more than the negative deficit “cost”

Could also generate more tax revenue via exports

PointlessWords, the proposed trade policy, Import Certificate policy, doesn't tolerate annual trade deficits and by rewarding exporters of USA goods, it indirectly but effectively reduces prices of USA goods exported from the USA. The reward to exporters is not directly or indirectly paid by any (USA or foreign) governments.
Read the link : https://en.wikipedia.org/wiki/Import_certificates .

Respectfully, Supposn

True. But they're not as 'net' detrimental to their nation's GDP if said nation loses/lessons its dollar's global reserve status. That would be hugely net detrimental to the average American's standard of living were that to happen. Say what we will about the FED, USTR, etc., but we can't deny they've kept up the global demand for USD.

Sorry yes your title basically proves itself. I meant to say that trade deficits aren’t always net negatives for the country

Welcome back to your thread, almost a year later!

I doubt that. There is zero doubt that a trade deficit negatively affects the GDP, as it has to by definition. What's strange/amusing about your posts is that you're explicitly stating the truism, but you seem to be merely implying that which is more controversial - that a trade deficit is inherently bad, and must be avoided. So my suspicion is that it is the latter you are, in your words, spending too many hours trying to convince people of.

P.S. Your screen name is included with every post already, so you don't need to sign them.

John21, regarding historical ascensions and declines of the world's “reserve national currencies”, the U.S. Dollar has been Very Slowly Declining as compared to precious metals and other currencies employed for global trade. Long term effects of Petro-dollars as not yet been determined.
Respectfully, Supposn

Refer to links:
currency-composition.jpeg (936×933) (keyring.app)

What Is the Petrodollar? (thebalancemoney.com)

PointlessWords, unless the nation experienced effectively “full employment”, their annual trade deficits were always net detrimental to their nation's economies.

USA's chronic annual trade deficits are analogous to lighting cigars with $100 bills. Certainly the “conspicuous consumption” of the wealthy is comparatively and easily sustainable; wealthy people's disdain for their children squandering of their family's resources are a cliche. There's are many more preferable uses for their wealth.

USA's chronic annual trade deficits greatest harm is to our numbers of jobs and those jobs wages; (thus, of the greatest harm is to our families' dependent upon wages).
Regardless of U.S. dollar being a 'reserve currency”, our nation shouldn't squander our wealth. Respectfully, Supposn

Do you think trade deficits are good or bad for workers in the host country?


Are you aware that trade deficits lower the value of the dollar relative to other currencies, which means exports go up and American businesses make more money than if there wasn’t a deficit.

You knew that right?

PointlessWords, I'm fully aware of trade deficits reduction effect upon the U.S. dollar's purchasing value, which should somewhat increase our exports; (but I doubt if they generally did so for us).
I'm aware of cheaper imports further reducing the U.S. dollar's rate of inflation, (i.e. tending to somewhat retaining the U.S. dollar's purchasing power.

But Trade deficits greatest detriment is to their nation's numbers of jobs and those jobs wages. Trade deficits also affect entities more sensitive to the financial conditions of their nation's wage dependent families. Among the largest and most sensitive of those USA entities are our federal and state governments.

That's why, (despite wage earning families being also consumer families), in aggregate, (unless the nation experienced effectively “full employment”), their annual trade deficits were always net detrimental to their nation's economies, and most particularly net detrimental to families dependent upon their wages. Wage dependent families are among, if not the greatest of USA's population segments.
Respectfully, Supposn

Cheaper imports reduce inflation? I have to think about that

Because GDP is not just imports minus exports. Obviously a country without oil is better off running a trade deficit, importing it and using it for economic activity rather than relying on horses.

Mostly true but as a snapshot. In short, it's in our long-term best interests to run a deficit trading our tractors for their food and then running a deficit trading our manufacturing robots for their tractors and then our algorithms for their robots.

PointlessWords, when we purchase cheap imported god in the 99-cent store. (that are now with sales tax cost us $!.25 + almost 9% sales tax = More than $1.36), it's a downward pressure on USA's prices, (i.e. slows down the U.S. dollars rate of purchasing power loses).

But our trade deficit's not driven by economic necessaries. We buy cheaper stuff simply because it's cheaper; but that practice, analogous to lighting cigars with $100 bills, is net detrimental to our economy.
That's why I'm among the proponents of the Import Certificate trade policy as described in Wikipedia's “Import Certificates” article; refer to link, Import certificates - Wikipedia .

Few USA economists are opposed to USA's trade deficits, but among the credible economists among those not opposed to our nation's trade deficits, there are extremely few, if any that who believe trade deficits are net beneficial to their nation or particularly to their nation's numbers of jobs and their wages. I wonder if many of them would contend that trade deficits are not net detrimental to their nation's numbers of jobs and their wages?

Respectfully, Supposn

Ecriture d'adulte, I'm not a socialist or an isolationist. If USA ever adopts the policy of Import Certificates as described in Wikipedia, it will eventually lead to increased annual volumes of USA's international trade than otherwise, more jobs than otherwise, and no annual trade deficits of goods. Respectfully, Supposn

Trade deficit isn’t necessarily bad .
It depends the level of debt you have or generate , the currency u have and demographic .

For example the US has a trade deficit in goods but is an exporter of currency (US$) ..

Fwiw what I see as a big problem from the US is the citizen gaining so much saving in trade deficit (buying cheaper goods) for decades and instead of keeping those gains and in invest it ( to counterbalance the jobs export) all they did with the extra money is to consume even more like idiots .
Which in turn forced the government to create even more debts .

Sure, the way that trade deficit happens matters, and thus this discussion is much more complex than "Trade deficits are net detrimental to their nation's GDP." But the trade deficit in isolation is indeed a negative factor in the GDP; I was hoping OP would move past that part and get to his actual point, which he since has (not that I'm taking credit for it).

MontrealCorp, you posted "[a nation's] trade deficit isn’t necessarily bad. It depends [on] the level of debt you have or generate, … ”. to some extent we're in agreement. But (Unless the nation's experienced effectively “full employment”), annual trade deficits were always net economically detrimental their nation's economy.

Are chronic annual trade deficits (such as the USA's) unsustainable? (As you posted), it depends [on] the level of debt being generated. A large lake being filled by streams, and emptied by a river leading to the sea, may never run dry, dependent upon the sustained rates of running water attributable to the streams and the river. Regardless of sustainability, annual trade deficits are economically net detrimental to their nation.
If annual trade deficits are necessary for the nation to survive, (regardless of the economic loses), the nation must tolerate the economic loss if it otherwise lacks the fuel, or the armament, or the food, or the medicine it needs for survival. But otherwise, annual trade deficits are always net economically detrimental the nation's economy.

MontrealCorp, you went on to post, “Trade deficit isn’t necessarily bad. It depends [on] the level … the currency the nation [has and its] demographic. For example the US has a trade deficit in goods but is an exporter of currency (US$)”. Currency and demographics?

Excluding the fore mentioned exception, due to a nation's annual trade deficit, their GDP was less than otherwise. Thus, their number of jobs and their wages were somewhat less than otherwise. “Currencies” aren't products subject to consideration within the calculation of gross domestic products, (GDPs).

[No one but I mention the proposed trade policy species of Import Certificates as described in Wikipedia's article entitled, “Import Certificates”. That policy is not applicable to the value of any mineral material included within a list of scarce or precious minerals. For the purposes of that specie of Import certificates drafted laws and regulations, assessment of product's values are reduced by the approximate values of such materials integral to globally traded products. For example, crude oil is very likely to be one of the items on that list. Have you read or looked at that Wikipedia article?]

Respectfully, Supposn

MontrealCorp, within these of your above quoted paragraphs, I don't know if you're agreeing or disagreeing with me? Most people wear different hats at different times; (people who are employees, are also members of wage dependent families, and consumers, and taxpayers.

Individual persons, and other entities as consumers, all benefit from our trade deficit's cheaper imported goods, and those cheaper goods to some extent reign in the U.S. dollar's rate of inflation. (But due to cheaper imported products, USA enterprises gain no comparative advantages over other enterprises. Among competitive enterprises, comparative advantages are the advantages that matter).

The individual employees and wage dependent families are, (due to USA's chronic annual trade deficits), the most net financially detrimentally affected of USA population segments. They are also among, if not the largest of USA's population segments.
USA entities more sensitive to the aggregate financial conditions of wage earners and their dependents, are also net detrimentally affected by our annual trade deficits, and USA's federal and state governments are the largest of those entities.
Respectfully, Supposn

Bobo Fett, when browsing through some old threads, I encountered this of your responses. Your response doesn't state, and I don't find where you've ever stated what is the point you claim credit for?

Regarding the point of my trade deficit posts, (unless a nation effectively experiences “full-employment”), annual trade deficits are always economically net detrimental to their nations' economies. Trade deficits greatest harm is to their nation's numbers of jobs.
Thus, of the greatest harm is to our families' dependent upon wages, (which is among, if not the largest of USA's population segments). This is in turn net detrimental to all USA entities sensitive to the financial conditions of wage dependent families. Our federal and our state governments are among those entities. Respectfully, Supposn

Probably because I don't claim credit?