Source: Xinhua News Agency
Xinhua News Agency, Frankfurt, April 9 (reporter Xiang Liu) - German economist Rüdiger Bachmann recently said in an interview published on the Deutsche Telekom-Online news website that "a trade deficit may be a symptom of economic problems, but for the United States, the situation is just the opposite", and the U.S. actually benefits from the trade deficit.
Bachmann, who teaches at the University of Notre Dame in Indiana, said that other countries in the world provide goods to the U.S., in exchange for which they obtain U.S. bonds. There is capital inflow into the U.S., and these funds are used to finance imports, enabling the U.S. to consume beyond its production capacity.
Bachmann believes that the U.S. actually benefits from the trade deficit, which economists call the "exorbitant privilege," meaning that the U.S. can continue to borrow without having to fully repay its debts. The long-standing trade deficit in the U.S. means that these debts will never be fully repaid.
Bachmann stated that imposing tariffs cannot promote the return of industries to the U.S. Enterprises consider not only tariff factors when choosing production bases but also many other factors such as high-quality labor and investment environment. The investment environment in the U.S. is becoming increasingly unfriendly, partly due to policy uncertainties brought about by the chaotic governance approach of the U.S. government.
Bachmann said that U.S. tariff increases will slow down U.S. economic growth and may even lead to a recession. Currently, consumer confidence and the stock market have already shown declines. In the short term, the U.S. may face higher inflation, as rising production costs make everything more expensive and harder to produce.
Bachmann said that even if some industries really return to the U.S., production costs will still rise. After all, enterprises initially chose to produce in other countries because it was more efficient and cost-effective there. Reversing this trend forcibly will only make U.S. consumers and businesses bear higher costs.
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