However one feels about Donald Trump, it’s fair to say he has usefully elevated a long-simmering issue in American political economy: the hardship faced by the families and communities who have lost out as jobs have shifted overseas. For decades, many politicians from both parties ignored the plight of these workers, offering them bromides about the benefits of free trade and yet another trade deal, this time with some “adjustment assistance.”
One of Trump’s economic goals is to lower the U.S.’s trade deficit—which is to say, shrink the discrepancy between the value of the country’s imports and the value of its exports. Right now, the U.S. currently imports $460 billion more than it exports, meaning it has a trade deficit that works out to about 2.5 percent of GDP. Given that the job market is still not back to full strength and the U.S. has been losing manufacturing jobs—there are 60,000 fewer now than at the beginning of this year,
according to the Bureau of Labor Statistics—economists would be wise to question their assumption that such a deficit is harmless.
Trump’s intention in reducing the deficit is to boost factory jobs, since America’s trade imbalance exists almost exclusively in manufactured goods. Putting aside how the Trump administration might go about this, is it smart economic policy? Is the U.S. trade deficit a problem whose solution would help American workers?
Why Trade Deficits Matter
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Not sure why this needs to be explained.
