TARIFFS/TRADE DEALS/TRUMP AS PRESIDENT: “President Trump’s fixation with America’s widening trade deficit is fueling his decision to impose stiff tariffs on steel and aluminum imports. Only a small group of experts share Mr. Trump’s fixation, and few see tariffs as an effective tool to narrow the so-called trade gap.
America’s trade deficit is the gap between how much in goods and services it imports from foreign countries, and how much it exports. Mr. Trump complains about the metric frequently, saying the trade imbalance is a measure of America’s weakness on trade policy… He went on to say that the country ‘lost $500 billion’ a year to China, though it was not clear what figure he was citing, given that America’s annual trade deficit with China has never climbed beyond $375 billion.
Most economists do not see the trade gap as money ‘lost’ to other countries, nor do they worry about trade deficits to a large degree. That’s because trade imbalances are affected by a host of macroeconomic factors, including the relative growth rates of countries, the value of their currencies, and their saving and investment rates. For instance, America’s trade deficit narrowed dramatically during the Great Recession, when national consumption faltered.
Mr. Trump has long argued that the trade deficit hinders economic growth, and that reducing it will accelerate American job creation. Even those who agree with that view say there are better ways to reduce the imbalance than through tariffs, which can backfire and further widen the trade deficit if other countries impose reciprocal tariffs.”
-Jim Tankersley, “Trump Hates the Trade Deficit. Most Economists Don’t.,” The New York Times online, Mar. 5, 2018