Opinion: What’s behind the ballooning trade deficit
A flag flies at the Port of Long Beach, Calif., last year. By Catherine Rampell Catherine Rampell Columnist covering economics, public policy, politics and culture Email Bio Follow Columnist March 6 at 2:49 PM For years President Trump has been obsessed with trade deficits, viewing them as a good measure of which countries are “winning” and which are “losing.” The United States has run a trade deficit for decades, thereby designating us a perennial loser in Trump’s worldview.
But the bigger question is this: Why exactly is the trade deficit expanding when Trump promised it would shrink? The answer largely has to do with Trump’s own economic policies. Today, the U.S. economy is healthy, with economic growth relatively robust. This is partly because of the fiscal stimulus Trump has been pumping into the economy, through both his tax cuts and federal spending hikes. Consumers have more money to spend, which means they demand more stuff, and companies have ramped up their imports to satisfy that demand.
He has picked trade wars the world over, with friends and foes alike. He has also threatened even more tariffs, including an additional hike in tariffs on Chinese goods, a new “national security”-driven duty on auto imports, etc. These actions and threats have led to some predictable consequences.
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