Tom Rants

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Tom Rants Default Trade deficit with China

Trade deficit with China

The Eclectic Econoclast takes a second look at the US trade deficit with China.

Here is one reason that the U.S. trade deficit with China is more complex than appears at first blush: China has a trade deficit with many other Asian countries.

It seems to me that this complexity is important in that the US trade deficit is driving a much bigger increase in trade than just the China-US numbers would indicate. The relatively minor problems for the US from the deficit (I’d argue that the deficit will cause more problems for China, which is essentially subsidizing American consumerism than for the US) may well be a small price to pay for the benefits of an increasingly active and complex web of international trade.

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