A paradox is a statement that contains conflicting ideas or that seems contradictory. In other words, they are propositions that show credible but, in fact, they are illogical. That is because it contains two facts that are opposed to each other and can't exist at the same time. The two things can’t happen at the same time is termed as paradoxical.
The similar situation is arising from the White House’s plan to cut its trade debt by forcing trade tariffs on the rest of the world. Think about what occurs when America buys $100 worth of goods from China. It pays for the purchases in US dollars. If China then buys $100 worth of American goods, then no trade deficit. The latest Singapore Stock Blogs are here.
Meanwhile, it also wants to be the reserve currency of the world. But it also means that China would have nothing in reserve. So, it buys less than $100 worth of goods from America and keeps the balance in US Treasuries or it allows the back-balance to America.
The conclusion is that if America wants to be the world’s reserve currency, which it does, then it must run some sort of a trade deficit with not only China but also with the rest of the world. That is the price it must pay for being the world’s reserve currency.
The value of the US dollar is likely to be artificially boosted which will make us less competitive in terms of US goods and services and could turn, increase in its trade deficit. Who would want to buy American-made vehicles, when Japanese vehicles are cheaper?
The problem with America’s trade deficit is contrary. It can influence China and other countries to buy more goods to narrow the trade deficit but then the US dollar would no longer be the reserve currency of the world. Thankfully, that is not going to happen. So, America is attached to a problem that even trade tariffs won’t solve. You can go through with Singapore Stock Market News.
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