Trade balance shows US doesn't produce that much others wants to buy while others produce a lot of things US wants to buy. You almost never see "Made in USA" outside of USA, except some agricultural products like almonds from California.
Look at the biggest software tech stocks. They generate enormous amounts from exports. Same for pharma. Same for AMD, and most of their final product is manuf in Taiwan, Malaysia, and Korea. Made in X will most often be seen on clothing and cheap consumer goods. Those are low value products, produced in poorer countries. Even the iPhone is mostly assembled in China, but where do most of the profits land? With Apple.
Trade balance isn’t going to show a lot of what the US offers, which is not readily convertible to a numeric figure.
Changes in currency exchange rates are the best way I know of to get a pulse on what the collective population of the world thinks about what the US offers.
Things like choosing to do business in the US because they overall trust the courts, or investing in US companies because they overall trust the management and SEC oversight. Or even just investing in US land because they trust the internal stability and lack of external threats.
> Changes in currency exchange rates are the best way I know of to get a pulse on what the collective population of the world thinks about what the US offers.
No it isn't, many non-American companies trades in US dollars without anything ever having to do with the USA. The world doesn't change what currency it trades in that easily, people will stick with the dollar until USA screws up majorly, like every previous world currency did.
A French bank was fined $9 billion by the United States because it routed Iran-France trade payments through US banks in dollars, violating American law (despite the trade being legal internationally), demonstrating the power of the US dollar as the global reserve currency.
When Will De-Dollarization Happen? Explained by Kishore Mahbubani
> The continued strength of the USD is just a vote of confidence in the buying power of the USD in the future.
Right, but that buying power comes from buying Chinese goods, so a European likes USD since China accepts it and you can buy stuff from them with it. Nobody buys American so that isn't a factor.
If China stopped accepting USD the demand for the currency would drop like a rock, since it is the main exporter in the world.
And why does China want USD? At the end of the day, demand is demand. One or multiple people want to use USD, and why would people want to use a specific currency? Because they trust it to get them something else they want in the future.
China has yuan, Europe has Euro, why can’t they trade that? Clearly, they don’t want each other’s currency, and the best option for both appears to be USD.
(Assuming the premise is true, I don’t know how eurozone countries pay China).
China isn't a free market, the government does strange things for reasons other than maximizing their own wealth. That completely screws over your analysis, companies go to where there is the most profits but undemocratic governments do not.
It is perfectly possible that China does this to weaken the US production industry making it more dependent on Chinese exports since it lets US buy Chinese goods with printed dollars instead of having to deliver anything in return. Then by suddenly ending this agreement it would devastate the US who is now unable to get those goods while China is left with the whole production pie.
> I don’t know how eurozone countries pay China
Europe exports to US and buy China, they are on average trade neutral since USA buys their stuff and they buy Chinese stuff. USA is the source of money and China is the source of goods.
It isn't like China is buying a lot of American stuff, but China hoarding USD makes everyone want USD at least. I'm not sure why they do it, your guess is as good as mine, but at least the world isn't getting USD to buy American stuff, they do it to buy Chinese stuff.
