Trade Deficits Aren’t the Problem – Unsound Money Is

Last week, the Supreme Court struck down the Trump administration’s unconstitutional and economically destructive tariffs. But, as the White House seeks to impose new trade restrictions through other avenues, it’s worth reexamining why trade policy and inflationary monetary policy typically go hand-in-hand.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

In recent years, and with particular intensity since Donald Trump’s ascent to the political center stage, trade deficits have been increasingly cast as symbols of national weakness. Persistent US trade deficits are treated not as accounting outcomes, but as evidence of unfair dealing, foreign predation, or elite incompetence. Surpluses are praised as victories, while deficits are framed as losses demanding correction through tariffs, subsidies, and industrial policy.

This fixation reflects a deep misunderstanding of international trade, one that classical economists understood well, but which modern policymakers have largely forgotten. Among the clearest and most systematic articulators of this older view was Ludwig von Mises, whose work offers a powerful corrective to contemporary trade anxieties. For Mises, trade balances were not policy targets to be managed, but temporary outcomes within a broader monetary process, one that, under sound money, tended naturally toward adjustment and balance.