Summary Of We Do Not Have A Trade Deficit By Kelvin Williamson

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The article, “We do not have a trade deficit,” by Kelvin Williamson seeks to dispel President Trump’s utterances of a threat to institute 35 percent tax on all businesses that outsource their jobs to cheaper countries and then sell the products in America, as the cause of trade deficit in America. Kelvin takes a hardline position of defending and proving that the president’s notion is not only wrong, as there is no trade deficit but also that the American economy is performing dismally due to capital surplus.
According to him, trade deficit is primarily a question of investor preference and minor on consumer preference. In the United States, there is twice the number of foreign investments when compared to China despite its growing rapidly. The notion comes up because numerous advanced countries engage in international trade where they export and import products from other counties better off at producing various products than others. Thus, companies from other countries that trade with the U.S. opt to invest their money in American assets.
He raises the question, why do Americans invest little in assets. According to him, trade deficits occur because people with money tend to invest in American assets instead of American consumer goods. Consequently, trade deficit immerges and thus, the presidents’ threat of a 35 percent tax increase on businesses would not change this situation. To understand this premise, he gives an example by Daniel Griswold who observed that when imports are subjected to high taxes; it prevents for...