Since 1975 – for 41 straight years – the United States has registered annual trade deficits with the rest of the world. That means that year after year, Americans spend more on foreign-produced goods and services than foreigners spend on U.S.-produced goods and services or, put simply, the dollar value of U.S. imports exceeds the dollar value of U.S. exports.

For almost as long, some economists have been arguing that trade deficits are unsustainable – they sap economic growth, bleed jobs, and saddle our descendants with debt. Perhaps if one looks at the trade deficit (or the slightly broader current account deficit) in isolation, these concerns might seem to have merit. But looking at the U.S. trade or current account deficits without considering the capital account surplus is a meaningless, misleading exercise.

Yesterday, I published this piece at Forbes online, explaining why the trade deficit is not only not a problem, but that the associated capital surplus (the excess of inward investment over outward investment), which includes high-quality foreign direct investment, bestows huge advantages on the U.S. economy. In that piece, I ask trade deficit hawks (or scolds, as I call them) to furnish their best, fact-based, comprehensive arguments – to finally step up to the plate and explain why it is that the trade deficit is a problem to solve. 

It would be of immense public policy value if we were to be able to catalogue and compare the arguments of both sides (and those who may be in the middle). After all, one of the reasons that trade is so maligned is that the public has been lead to believe that the trade account is a scoreboard, with the deficit indicating that Team America is losing – and it’s losing on account of poorly negotiated trade deals and foreign cheating. Helping the public reach that conclusion (rather than find the truth) may be the goal of some noisy contributors, but I suspect there are plenty of trade deficit hawks with purer motives, if not convincing arguments.

We intend to host a public debate on this question later this year, so it would be good to have some compelling, fact-based arguments that the trade deficit is a problem to solve. (Feel free to forward by email or social media.) Below is a short list of some of Cato’s expositions of the arguments that the trade deficit is not a problem to solve:

• Dan Ikenson, The U.S. Trade Deficit Is Not a Debt to Repay, March 22, 2016
• Dan Griswold, America’s Maligned and Misunderstood Trade Deficit, April 20, 1998
• Dan Griswold, “Bad News” on the Trade Deficit Often Means Good News on the Economy, January 11, 2005
• Dan Griswold, Does the Record Trade Deficit Threaten the U.S. Economy? March 21, 2007
• Dan Ikenson, Trade Deficit Oped in The New York Times Is Heavy on Fallacy and Wrong on Economics, November 8, 2013
• Dan Ikenson, Appreciate This: Chinese Currency Rise Will Have a Negligible Effect on the Trade Deficit, March 24, 2010
• Donald J. Boudreaux on the trade deficit and foreign investment, May 1, 2011
• Dan Ikenson and Scott Lincicome, Beyond Exports: A Better Case for Free Trade, January 31, 2011
• Dan Ikenson, Made in America: Increasing Jobs through Exports and Trade, March 16, 2011

And here’s Milton Friedman talking to Kansans about the subject: Milton Friedman on Trade Balance and Tariffs