That said, a more connected world is not wholly responsible for the displacement of certain American workers. Even if we halt all progress toward globalization, including imports and outsourcing, advancements in technology alone would cause certain jobs within industries such as steel, textile and automobiles to eventually become outdated.

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The coolest thing about a capitalist economy, however, is that it offers everyone the opportunity to adjust as the demands of the economy evolve.

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W know we sound like a broken record, but it’s better for all of us to reject isolationism and embrace the world market. We do not have such an embarrassment of riches in this country that we can afford to abandon this golden opportunity solely out of fear and misperception.

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Thanks to the Trump/Vance administration’s extremely misguided and misinformed beliefs about this topic, perhaps the number one misconception about global trade is that there must be “winners” and “losers.” This is a false premise.

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One of Tariff Man’s favorite rally lines is that the entire world is out to get us, screwing us at every opportunity. But that’s just not true. Guys, honestly, that’s just not happening.

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Donald, we need you to listen up, pal: Contrary to what you seem to think, trade deficit doesn’t automatically mean we’re getting screwed. Trade deficits are not scorecards that keep track of who is winning and who is losing, or if trade deals are “good” or “bad.” Unlike what you seem to believe about everything, trade is not a zero-sum game.

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Let’s say that China really loves American tractors. They just can’t get enough of our tractors over there! So, China buys $100 worth of our tractors. We, in turn, love us some Chinese fortune cookies. We just can’t get enough of Chinese fortune cookies! So, we buy $200 worth of Chinese fortune cookies.

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The difference between these two purchases is the trade deficit (i.e., the gap between how much in goods and services we import from other countries, and how much we export to them). As it stands now in our example, China has a $100 trade surplus and America has a $100 trade deficit. But notice that no one is “winning” or “losing” in this scenario. Remember, we didn’t just write China a check for nothing ...we got a lot of fortune cookies for our money!

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It’s true that trade deficits are subtracted from the Gross Domestic Product (GDP) so, on paper at least, if one country is selling less stuff, they could be producing less, which means there could potentially be less jobs. But in real life, that’s not necessarily true.​ For instance, the United States had a large trade deficit in 2009, when the unemployment rate was 10 percent, but had an even larger trade deficit in 2006, when the unemployment rate was just 4.4 percent. The trade deficit is more a function of the value of the U.S. dollar (more on this in a minute).

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Isn’t this fun!?! Now, there’s a flip side to all of this that some people fail to consider, and it’s a major one. When we last left our tractor/fortune cookie trade, China had a $100 trade surplus. So, what is Xi Jinping going to do with that $100?

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Well, he can do one of two things: 1) He can do nothing and just keep the money in a back account somewhere. However, this will just increase the value of his currency and ultimately push his domestic prices upward; OR he can 2) Take the $100 and invest it back in the United States through stocks, bonds, or direct investment (i.e., plants, equipment, and real estate).​ The Economist explains this concept way better than we can: “It is as if container ships arrived at American ports to deliver furniture, computers and cars, and departed filled with American stocks and bonds. Over time, those assets yield returns in the form of interest, dividends and capital gains.”

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This is awesome because foreign direct investment (FDI) is vital to our economic growth and development – and the U.S. attracts more foreign direct investment than any other nation in the world.

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The Economist continues, “To the extent that trade deficits thus represent borrowing from abroad there is some truth to the idea that they could erode American wealth. But that is to ignore a crucial point about the debt incurred: it comes cheap. America has run current-account deficits – which are substantially driven by the balance of trade – almost every year since 1982. As a result, foreigners own American assets worth $8.1 trillion more than the assets Americans own overseas, a difference equivalent to 43 percent of America’s GDP.” (this was written in 2017)

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It’s very important to keep in mind that trade deficits are different for the United States than other countries because our currency is the dominant global reserve currency – meaning the U.S. dollar is used in many transactions that the United States has nothing to do with. Many countries trade with one another – and borrow and lend – using the U.S. dollar. This increases the demand for our dollar on foreign exchange markets which, in turn, makes our dollar stronger. A stronger U.S. dollar, in turn, makes our exports more expensive and imports less expensive – which ultimately leads to an overall trade deficit.

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In fact, because of our currency’s position in the world, the U.S. running a trade surplus would likely wreck the entire global market. That sounds dramatic but remember that, in the past four decades, the United States has had current-account surpluses in only three years –1980, 1981 and 1991 – and each of those years was tied to a recession.

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Far from being a burden, we as a country want this role. It gives us unparalleled power in global finance, not to mention lower interest rates and a strong stock market. So, Mr. President, the lesson here is that, if the American economy is growing faster than other economies around the world, our trade deficit will probably increase – because strong domestic growth increases America’s demand for imports while, at the same time, weaker foreign growth decreases the world’s demand for America’s exports.​​​