Donald Trump Is Wrong About the Trade Deficit Data - Chart Of The Day 11 July 2018 - Equitymaster
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Donald Trump Is Wrong About the Trade Deficit Data
Jul 11, 2018


In March 2018, Trump said, 'Last year we lost US$ 500 billion on trade with China.'

But this isn't true.

According to the US Census Bureau, the actual trade deficit is US$ 375 billion.

Also, running a trade deficit isn't a bad thing.

If trade surplus was a measure of success, then why hasn't countries like Nigeria, Malta, and Azerbaijan faring well? These countries enjoyed trade surpluses last year.

Or take the example of Japan, which is enjoying a trade surplus for many years, but it failed to lift its economy from a low growth phase.

The Trump view is basically that exports are good. They are like revenues. Imports are bad. They are like costs.

However, this approach doesn't consider that both imports and exports are beneficial.

So, by buying goods and services more cheaply than it costs to produce them at home, the nation benefits from imports.

Similarly, by selling goods and services in world markets, it can enjoy higher prices for them than it could earn by selling only at home.

That's the point of any trade.

Nevertheless, at the current juncture, trade wars have created some fear in the market.

But this is an opportunity to lap up good stocks.

In fact, last week, Tanushree sent two special updates to StockSelect subscribers.

Two Buy at lower recommendations have now become Buy recommendations.

In case you don't have access to StockSelect, you can sign up here.

Data Source: US Census Bureau

This Chart Of The Day was published in The 5 Minute WrapUp - Protect Yourself from Trump's Trade War

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