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Notes -
As far as I understand Trump, he considers the trade imbalance itself a problem and thus if a country doesn't buy enough american goods - even if it isn't the result of tariffs - that needs to be fixed. Negotiations can then still be done by the governments of the respective countries by deliberately buying american for large-scale infrastructure projects and pressuring their own larger companies to invest/buy more american. Taiwan, for example, has had no tariffs, but has declared their intention to invest more into american companies to start negotiations.
But yes, I agree overall. Achieving a perfect equal trade balance with all countries is the same kind of nonsense as the desire on the left for the perfect equality of all people - neither desirable nor realistic. I'd greatly prefer genuine reciprocal tariffs.
Presumably with free floating exchange rates, trade should end up roughly balanced between all currencies, right? So even if the country doesn't buy enough american goods, they would at least trade the USD back into their own currency, making theirs more valuable and therefore less competitive over time, until trade balances.
I think the only way to get persistent trade surpluses is when one country is saving in the other's currency (earning or buying their currency, and then just sitting on it). Some small amount of that will happen dynamically, particularly for desired stable currencies. But any country actually trying to pursue serious export-led growth will have to actually continually buy up foreign reserves and sit on them. That was definitely the case with Japan, and then China; I'm not sure about Switzerland/Israel/Singapore.
And thus, any kind of not letting the currency truly float (with a declared or de facto peg), is maybe what Trump had in fine print as 'or otherwise from currency manipulation', on his chart.
Meanwhile personally, I'm on the side that thinks other countries working hard to make stuff to send to us, in exchange for dollars that they can't spend, is on balance a strongly desirable position for us (as long as we can find jobs for people to do other than manufacturing). But yeah this has always been trump's ideology, that trade deficit = getting ripped off.
From what I understand, Import/Export is specifically goods and services exchanged for money, so it does not include many financial instruments, such as direct investment into a foreign country or leaving your money at a foreign bank. So a country can run a long-term trade deficit indefinitely as long as it can re-capture the difference this way. Which is especially easy if you just-so happen to be the financial headquarter of the world. But yes, many countries saving in US currency is also an option.
I agree that, if anything, this implies a trade deficit is good for you.
Yeah it's not that foreign governments / central banks buying the currency counts for imports/exports. It's just that that's the required action to counteract the natural sell-pressure on the net-importer currency and the buy-pressure on the net-exporter currency, which would otherwise cause the exchange rate to move and would eventually end up evening out the imports & exports, dynamically.
So I believe the agency is pretty much all on the side of the trade surplus nation/currency, because anyone can issue their own currency and buy foreign reserves (which will be called 'establishing/maintaining an exchange rate peg' if formally acknowledged). No one can really force themselves into the trade deficit side.
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