Warren Buffett wrote this article, originally titled "America's growing trade deficit is selling the nation out from under us. Here's a way to fix the problem—and we need to do it now" for Fortune in November 2003. At the time, few were talking about free trade as an issue. But free trade and whether it harms or helps the U.S. economy and U.S. workers has become a major policy debate in the 2016 presidential election cycle. In the article, Buffett proposes a novel trade system that is nonetheless along the lines of what Donald Trump and Bernie Sanders have proposed. In 2016, when this was reposted, Buffett says that he still mostly believes in what he wrote in the pages of our magazine 13 years ago, "though the problem has diminished a bit because of the lower price of oil and our country’s increased reliance on domestic production.”
I'm about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem. But first I need to mention two reasons you might want to be skeptical about what I say. To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits—and, as you know, we've not only survived but also thrived. So on the trade front, score at least one "wolf" for me. Nevertheless, I am crying wolf again and this time backing it with Berkshire Hathaway's money. Through the spring of 2002, I had lived nearly 72 years without purchasing a foreign currency. Since then Berkshire has made significant investments in—and today holds—several currencies. I won't give you particulars; in fact, it is largely irrelevant which currencies they are. What does matter is the underlying point: To hold other currencies is to believe that the dollar will decline.
