"The stock market is telling us that tariffs are a bigger problem than the trade deficit."
I think I am getting a bit of tariff fatigue at this point. This article is more about the trade balance, but it explains the perspective from both sides and explains the role of capital flows. Irrespective, the author makes a lot of really good points. Here are the CliffNotes:
1) "... broad economic uncertainty and risk aversion. All because U.S. politicians wrongly see the trade deficit as a problem."
2) "... nations with large trade surpluses envy trade-deficit nations. Whatever side a country is one, the grass always seems greener on the other side."
3) "... while America gripes about America's trade surplus, China gripes about America's investment surplus. Each seems to want what the other has."
4) "... societies can never be happy with their economic model. We humans are just inherent malcontents ... hard wired to hate what we see as a loss much more than we appreciate what we count as a gain."
5) "... we get politicians promising salvation, then implementing policies that do more harm than good ... instead of having humility and getting out of the way and letting people and businesses do their thing."
I suspect that Elisabeth Dellinger is going to get some heat from folks that will view this as partisan, but it's just basic economic theory that is really well explained. Everyone should read this one. Happy Friday. FT