
This brilliant small business owner gets trade deficits so much better than Trump and it’s required reading for Magas everywhere
Everyone who knows anything about tariffs knows why Donald Trump is wrong – so wrong – to take the world to the precipice of a devastating global trade war in the name of Making America Great Again.
But while Magas are many things, they are not necessarily majors in economics, which is presumably why he retains all the support that he does (at the time of writing).
But if anyone needed a totally on the button and easy to understand explanation of why a trade deficit is not necessarily a bad thing (we’re looking at you, Magas) look no further than this small business owner who took a moment to explain on Twitter.
And it went viral for reasons which will presumably become obvious.
I own a small dessert business. My business has a 100% trade deficit with the grocery store. I’m always buying from them, and they’ve never once bought anything from me.
Now, of course, I take products I buy from the grocery store, turn them into delicious baked goods, and make…
— Jo Thomas (@rthomas86) April 6, 2025
And that post by @rthomas86 in full …
‘I own a small dessert business. My business has a 100% trade deficit with the grocery store. I’m always buying from them, and they’ve never once bought anything from me.
‘Now, of course, I take products I buy from the grocery store, turn them into delicious baked goods, and make a 50%+ profit, while the grocery store is running on 2-4% profit margins, but WE HAVE A TRADE DEFICIT! They’re ripping me off with their low, low prices, because they NEVER buy anything from me!
‘Of course, the alternative is for me to grow, harvest, thrash, grind, then finely mill all of my own flour, including into the various mixes of flour that I use for various products (cake flour, bread flour, all-purpose, etc…), maintain and milk a dairy cow, churn my own butter, make that milk into heavy cream, yogurt, sour cream, condensed milk, and evaporated milk, etc…grow cacao, and then turn into all the different kinds of chocolate and baking cocoa… grow and harvest sugar cane, sorghum, mine salt, make baking powder, baking soda, grow vanilla beans, etc, etc, etc…
‘All of that (plus WAY more), and we haven’t even talked about all the different fruits and nuts I would need, or how I would only be able to offer certain products during certain times of the year, or how a lot of what I said before wouldn’t even be possible in the climate I live in, but I digress.
‘If all of that wasn’t cost-prohibitive enough to completely wipe out my profits (it would be, and then some), the time commitment and significant additional physical labor certainly wouldn’t make any of it worth the tiny remaining profit.
‘Now, compare that to the current screeching about the trade deficits we have with other countries. We import raw materials (aluminum, steel, lumber, etc…) from other countries, which would be labor and/or cost prohibitive for us to make, or that we simply cannot produce or source here, and then we take those materials, and turn them into higher profit margin products, which we then export to other countries. It is exactly the same as my example, but on a macro scale.’
QED.
And here is just a little bit of the love it prompted.
This is such a brilliant breakdown. I used to get caught up in the talking points about “trade deficits” without understanding how value is created. The moment I stopped thinking in transactions and started seeing transformation, everything changed. Thank you for laying it out so…
— The Optimized Path (@OptimizedPath) April 7, 2025
Trust the process. Trump is playing 24D underMartian water chess. Only He can save us
— Mr. Pugsley (@BraveNewTweets) April 7, 2025
Very good logic!! It’s like the Canadian oil the U.S. buys. $100 billion worth. Once refined and turned into various products it is resold for $300 billion. Our potash, which the U.S. has limited supplies of, triples yields of grains and vegetables.
— Golfer62 (@golftomuch) April 7, 2025
A brilliant example to help us understand why a trade deficit is in itself a bad thing. You buy raw goods from A, make something and sell that to B, C and D at a profit. It doesn’t matter that A doesn’t buy any thing from you. They’re not your market.
— Suzanne (@HRSociology) April 7, 2025
Some Magas still didn’t get it, obviously, and got just the treatment they deserved.
Counterpoint: you’re being ripped off and should trust the plan
— Werther Marciales (@RobotDolphin3) April 7, 2025
— Jo Thomas (@rthomas86) April 7, 2025
Holler back when your friendly grocery store opens a dessert business and runs yours into the ground.
— Chonk Norris (@RedBarn53079205) April 6, 2025
They have a bakery. I’m doing fine. Thanks.
— Jo Thomas (@rthomas86) April 6, 2025
Why? Why are you not buying wholesale!? I can never understand how local businesses think buying retail turns any sort of long-term profit. ♂️☕️
— JavaDewd (@javadewd) April 6, 2025
I do buy my most commonly used ingredients in bulk, but I still have a “trade deficit” with those suppliers. For simplicity’s sake, I used the grocery store as an example.
— Jo Thomas (@rthomas86) April 6, 2025
Deliciously done!
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Source @rthomas86 Image Unsplash