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The U.S. economy has been doing very well for many years now, making it an attractive place for foreigners to invest in. As a result, they have been willing to finance growing U.S. trade deficits in the 1990s (Chart 1). While the deficits have reached unprecedented levels, the dollar has shown no consistent signs of weakening over this decade (Chart 2). Thus, trade deficits can be sustainable for a very long time, making the short run relationship between trade deficits and the dollar very tenuous. To conclude, in the long run, trade deficits may be expected to contribute to a weaker dollar, as the economy adjusts to create the surpluses needed to repay foreign investors. However, in the short run, the relationship between the trade deficit and the dollar is weak, and the value of the dollar is determined largely by investor preferences for U.
400 billion trade deficit = perhaps 40 billion profit
Whats the tax to the US on 40 billion profit? ?
10 billion? tax how far will that go towards your healthcare?