Everyone Except South/Central America Is Against Us?

Can it be that every geographic region of the World, save for South/Central America practices unfair trade with the US? Since 1976, the only geographic region of the World that the US has come close to running a trade surplus in goods is South/Central America. Are the other regions of the World practicing unfair trade practices with the US or might there be another reason why the US consistently runs goods trade deficits with them?

Of course, if I did not think there is another reason, I would not have posed the question. Consider the following identity:

Gross Domestic Production = Gross Domestic Purchases + (Exports – Imports)

Rearranging some terms, we get:

Gross Domestic Production – Gross Domestic Purchases = (Exports – Imports)

If Gross Domestic Purchases exceeds Gross Domestic Production, then imports must exceed exports. In simpler terms, if the households, businesses and government entities of a country, collectively, spend more than they produce, they must run a trade deficit. Collectively, the rest of the World is “lending” the trade-deficit country goods and services.

Let’s go to a chart. Plotted in the chart below are the annual trade deficits in goods the US runs (blue bars) along with the difference between annual US Gross Domestic Production and Gross Domestic Purchases (the red line).

As one can observe, the trade deficit in goods tends to get wider as the difference between Gross Domestic Production and Gross Domestic Purchases widens. If the US trade balance in services were added to the goods trade balance, the blue bar values would exactly equal the red line values. Remember, the identity, Gross Domestic Production minus Gross Domestic Purchases equals the trade balance, (exports minus imports). Also remember that an identity does not tell us about causality. But how likely is that the US runs goods trade deficits with every geographic region of the World, save South/Central America because each of these other regions practice unfair trade practices with US? And South/Central America does not? My hunch is that the reason the US consistently runs trade deficit is because the households, businesses and government entities of the US consistently spend more than they produce.

Is running a trade deficit “bad”? Not necessarily. Suppose that a country imported all of its goods that rapidly depreciated. This would free up the country’s productive resources to produce goods that had a long life. By devoting more of a country’s resources to long-lived assets, that country’s future real economic growth would likely be enhanced. Similarly, if a country imported all of its short-lived goods, it would leave more of a country’s productive resources to enhance its military defense capabilities. Isn’t ironic that China has been indirectly financing our military capability?