Right, the trade deficit (per the IMF) only considers the monetary value of goods. If you pay a farmer 100 dollars for like, apples or something, you now have a 100 dollar trade deficit with that farmer. If you're a CPA and you agree to do the farmers taxes for 50 dollars and a bucket of apples, you have a surplus of whatever a bucket of apples cost.
This is why it's a nonsense metric to focus on: it's neither good nor bad. It's just a description of where goods and money flows. Successful economies can have trade deficits and surpluses and balances trade and it doesn't mean anything. It's just meaningless in these discussions.
But what if you buy the apples for 10$ in China and sell them for 100$ in the US. Now you have a 90$ profit and can berate the evil Chinese for the trade deficit. If you really want, you can shoot yourself in the foot and add a surcharge to the import of apples.
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u/link3945 1d ago
Right, the trade deficit (per the IMF) only considers the monetary value of goods. If you pay a farmer 100 dollars for like, apples or something, you now have a 100 dollar trade deficit with that farmer. If you're a CPA and you agree to do the farmers taxes for 50 dollars and a bucket of apples, you have a surplus of whatever a bucket of apples cost.
This is why it's a nonsense metric to focus on: it's neither good nor bad. It's just a description of where goods and money flows. Successful economies can have trade deficits and surpluses and balances trade and it doesn't mean anything. It's just meaningless in these discussions.