Comment by aurareturn
11 days ago
Vietnam: Exports 136.6, Imports 13.1 Deficit = 123.5
Taking Vietnam as an example, keep in mind that the trade deficit calculation only uses physical goods.
Vietnam exports low value physical goods to the US. The US sells high value non-physical services such as Microsoft office, ChatGPT, Netflix, Facebook ads, iOS Appstore fees, iCloud subscriptions, etc to Vietnam. Other services include engineering consultants, US tax auditors, US consulting companies, etc. None of these are factored into the formula.
So a country like Vietnam gets royally screwed by this formula. They are actually buying way more from the US than just the physical goods.
If you're Vietnam, it's very hard to "just take it" as suggested by Treasury Secretary Scott Bessent. The formula is flawed in the first place.
If we truly want fair, the formula should be based on total profit of the goods and services sold. Services have much higher margins than physical goods typically.
I am quite certain that none of that software revenue is recognized in the US. https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute
This is such an obvious fact and the fact that not more people see through this is insane to me.
The "trade deficit" is an arbitrary number unrepresentative for what the US makes the most money with.
That's true for most other places, including the EU. With services included, the trade imbalance is negligible. Source:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_...