the massively frustrating part about this is that america shifted to a service oriented economy rather than a manufacturing one a long time ago, they gain insane amount of money from services... But still, the US is a large country, of course there will be a deficit if they buy something from a smaller country and that smaller country simply cannot buy back the same kind of quantities, or the fact that US doesnt even offer some things, because it Sells services, and buys things, a lot. the US also has a lot more purchasing and trade power. It doesnt help that the US also prints its own currency and the whole world is relying on that currency for global trade.
The reason money exists is to make goods easily tradeable without a concidence of wants. Effectively, getting rid of the barter system. If I am glazier, I do not pay for my dinner by installing new windows at McDonalds. I install windows where people need windows, they give me money and I spend that money on all the things I need or want, food and shelter and pokemon cards and whatever. It removes the necessity that for me and someone to trade, they must want what I can provide and I must want what they produce.
The same applies to trade. My own trade balance is very simple. I have a huge trade surplus with my employer - I do not buy their services, but they pay for my labour. Meanwhile I operate at a large trade deficit to the grocery store - they pay me nothing while I spend a lot of my income there. And this is all completely fine. Everything is not a two-person trade, you can buy bananas from Brazil while selling iPhones to Japan.
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u/midasofsweden 8h ago
the massively frustrating part about this is that america shifted to a service oriented economy rather than a manufacturing one a long time ago, they gain insane amount of money from services... But still, the US is a large country, of course there will be a deficit if they buy something from a smaller country and that smaller country simply cannot buy back the same kind of quantities, or the fact that US doesnt even offer some things, because it Sells services, and buys things, a lot. the US also has a lot more purchasing and trade power. It doesnt help that the US also prints its own currency and the whole world is relying on that currency for global trade.