Discussions about the tariffs that President Trump has imposed on various countries, or is threatening to, have mostly centered on two things. One is the president’s desire to reduce America’s trade deficits with other nations, and the other being his vow to protect the jobs of domestic workers, mainly in the manufacturing sector. Much of the commentary regarding the harmful effects of the tariffs has also focused on the expectation that those levies on imports will raise the prices of goods and services that Americans consume.

In a Wall Street Journal article published last week, economist and Wharton finance Professor Jeremy Siegel highlighted another concern about President Trump’s tariffs. He says that the $918.4 billion U.S. trade deficit in 2024 should not be seen entirely in a negative light. The large deficit means that this country buys more from overseas than it sells to other countries, thereby robbing American workers of lucrative jobs. But Professor Siegel points to the relationship between trade and capital flows and argues that the trade deficit should also be considered as a capital surplus that helps boost prices of U.S. assets such as stocks, bonds and real estate. He partly blames the steep drop in the U.S. stock market in recent weeks to the looming trade restrictions from the president’s policies.

Professor Siegel’s argument was quite illuminating. But after reading it, I wondered whether it will convince anyone on Main Street. There has been a longstanding and widespread view in this country that Main Street, where the vast majority of ordinary Americans live, is not that interested in what happens on Wall Street. In fact, the masters of the universe who occupy that more glamorous boulevard are frequently blamed for the economic inequality and its many attendant problems that plague the nation.

My view has always been that while there may be some harmful excesses on Wall Street, ordinary Americans like me should always wish for prosperity on both streets. Indeed, there are some of us on Main Street who, because we have some of our retirement accounts invested in the financial markets, take interest in what happens there. A good majority of the Main Street population has no such stake however. But even they should care because they benefit from the taxes paid by investors.

The debate about what constitutes a fair capital gains tax rate will likely go on forever. But the rate wouldn’t matter, whatever percentage it is, if there is little to tax. I would rather take a small fraction of a large pie. That is often better than a big slice of a number that is close to zero.

Despite America’s perennially large budget deficits, interest rates have stayed low throughout the national economy for decades. Most economists and financial market experts, as well as Federal Reserve officials, have consistently attributed that to the capital surplus that Professor Siegel alludes to. Those low rates have brought enormous benefits to all Americans, whatever street they live on.

It is productive to have a robust national conversation about high trade deficits. Unfair trade practices, where they exist, need to be identified and corrected. But there are many benefits from free trade that shouldn’t be thrown away through imposition of ruinous tariffs.