I always hear about tariffs but isn’t part of the trade imbalance due to corporate taxes being usually much lower outside the USA, incentivizing American companies to outsource production and keep the money abroad ?
One could suspect, and many have, that this is the reason.
In 2023, the total value of international U.S. imports of goods and services amounted to 3.83 trillion U.S. dollars
The lovely graph in this link suggests that foreign ownership of stocks was 40% in 2019 and growing rapidly: https://taxpolicycenter.org/taxvox/who-owns-us-stock-foreign...
The total market capitalization of the U.S. stock market stands at $62.2 Trillion (January 1, 2025)
Your idea is likely irrelevant since companies would retain ownership of foreign capital. Metaphor: owning JPY or USD makes little difference.
Disclaimer: not an economist. I'm extrapolating from my own experience as a New Zealander buying US stocks. I've sold 75% of my US holdings since January. Sold more since tariffs. Scaring away foreign investors might crash market but fix trade imbalance? Presumably the signal would be other stock markets going up as money shifts away from US.
Peter Navarro writes:
The US cumulative trade deficits in goods from 1976 — the year chronic deficits began — to 2024 have transferred over $20tn of American wealth into foreign hands. That’s more than 60 per cent of US GDP in 2024. Foreign interests have taken over vast swaths of US farmland, housing, tech companies..."
and:
[Foreigners] pump "so much money into the U.S. economy that it fuels economic vulnerabilities and crises." There is too much foreign demand to own our tech companies, so we have to reduce it, by making the tech companies’ stocks worth less.Maybe foreigners own 40% of US tech companies, but if 40% of US tech company income is coming from outside of the US then that is fair.
The US got a big slice of a bigger pie due to foreign investment. That investment surely supercharged the growth of tech companies (especially via IPOs) - just like good VC can do.
And meanwhile the US government is wanting to buy our businesses - and they use policy and agreements/accords to push that agenda to the benefit of the US. New Zealand sells good businesses cheaply to US and EU owners. Our government wants to give away equity and earnings. The right leaning minority party (ACT) are financial plonkers trying to sell New Zealand cheaply like a child loving a credit card. Sell NZ for some immediate income but cost us income over the years (that's the bargain you get with investors). Fine if the pie size is increased, but it isn't.
https://www.grumpy-economist.com/p/tariffs-saving-and-invest...