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Headquarters Foundation: A Good Economy May Make America Think About Fees | Markets | 07/27/2021

Along with that the growing US economy with a trade deficit will lead to more protectionism. There could be a debate over whether tariffs or other trade sanctions should be introduced or increased – with implications for the global economy, warns the HQ.

Dr. Michael Hayes, Headquarters Foundation

© Headquarters Foundation

Being good at first glance could become a new problem in the medium term and cause a stagnation in the stock markets: US government’s major economic stimulus measures and central bank policy lead to increased demand: Both consumer and consumer goods in the United States are already in double digits – with implications for foreign trade, says Dr. . Michael Highs.

International exchange under the microscope
In his analysis, the chief economist of the HQ Foundation looked at the U.S. trade balance to nearly 200 countries worldwide: with which countries does the US create surpluses, and which deficits? Also: Will the report change if you keep the trade balance related to GDP?

According to Hayes, the US decision looks relatively consistent at first glance: only 107 out of 107 countries with a positive trade balance compare with a negative one. Countries that prioritize U.S. exports include the Netherlands and Hong Kong. In China and Mexico, imports dominate.

However, if you keep the trade balance related to GDP, the picture is different. “The surplus of the trade balance is only 0.6 percent on average, but the average deficit is 4.8 percent,” Hayes explains and warns: “The strong import loss caused by the actions of the U.S. government will lead to a current account deficit of more than $ 800 billion in the U.S. economy by 2021. This is 3.5 percent of GDP.” . “

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From the US point of view, the number of countries with a positive trade balance dominates (left side of the graph). However, if you put this with GDP, the picture looks completely different (perfect graphic area).

New debates about fees are threatening
According to Hayes, similar values ​​existed in the past. You do not have to be quick to create problems. “However, according to Hayes, a debate is likely to flare up again: the United States will provide strong impetus to the world economy, but America’s enormous national debt will primarily benefit other countries.

“This could lead to protectionism: there could be a debate about whether tariffs or other trade sanctions should be introduced or increased – with implications for the global economy,” Highs predicted in the conclusion. (aa)