Trade deficits aren't necessarily bad!

Noah Smith challenges the common perception of trade deficits, using the credit card analogy to illustrate that they represent acquiring more goods in exchange for future financial obligations. This perspective helps us understand how South Korea, for example, leveraged trade deficits to fuel rapid industrial growth, particularly in its manufacturing sector, by importing necessary capital goods. However, the US experience with China demonstrates the potential for trade deficits to contribute to deindustrialization, as seen in the decline of American steel and textile industries. Therefore, while addressing deindustrialization is crucial, tariffs offer a simplistic and potentially harmful solution.