One must understand a little International Economics before one can comprehend what a Trade Deficit was. That is an archaic term applicable to the era when there was a specie based monetary system of fixed exchange rates. Under that system when a country imported more than it exported specie (gold, silver) had to be surrendered to pay the difference. This was the typical condition of the US until the 1870s.
Since 1973 we have not had fixed exchange rates but floating exchange rates with no specie backing for the dollar. This means we have NO "trade deficits" anymore. NOW we exchange dollars for goods. These "deficits" are actually a measure of economic health and only possible when the economy is growing. We can tank the economy and watch those "deficits" shrink as the nation becomes poorer.
"Deficits" are a measure of relative wealth. At present it is about 6% of the GNP.
Our income tax system has no effect upon pricing and thus is not disadvantegous wrt the rest of the world.
Can you believe this?
Our income tax system has no effect upon pricing and thus is not disadvantegous wrt the rest of the world.
Actually untrue, as the effect in exchange rates acting in reaction to exports is the depreciation of the American dollar against foreign currencies causing an outflow of capital asset investments away from the U.S. to move trade flows toward balance.
Removing the effect of taxation from our exports causes foreign currency exchange rates to depreciate in relation to the American dollar (i.e. our dollars appreciate against their currencies) pulling more investment into the U.S. to move trade flows toward balance.