Imports: Tariff wars yield yawning trade gap
Tariffs on solar panels have hit buyers hard.
The president may never celebrate a trade deficit, said Karl Smith in Bloomberg.com, but maybe he’ll learn not to hate it. The deficit is a sign of American strength, not weakness. The economy is the best it has been in a generation, and businesses are increasing their investment in plants and equipment. U.S. trading partners, however, are struggling. “Most of the major economies in Europe are on the edge of recession.” China’s economy is slowing as well. This means “foreign consumers and businesses are spending less” on U.S. products. The primary cause of the deficit, said Robert Samuelson of The Washington Post, is the strength of the dollar. It’s strong because the entire world uses it as a global currency. That feeds the demand for dollars, and makes imports cheaper for us. The only times the U.S. has run a trade surplus have been during recessions, when the world economy slowed and U.S. imports fell. If you’re really intent on achieving a trade surplus, the easiest way “would be to cause a worldwide economic collapse.”
Trump campaigned on the notion that we have a trade deficit because we made “bad deals,” said Paul Krugman in The New York Times, and his solution is “to throw up barriers to foreign products.” That’s not how trade works. Yes, the 2018 tariffs cut imports of some items. “But imports of other goods rose, while exports performed poorly.” The end result is that the deficit soared. This is “exactly what you should have expected” from the tariffs. For all the tough tariff talk, Trump didn’t accomplish his goal, said Jennifer Rubin in The Washington Post. But he did “inflict pain on farmers” and increase costs for American consumers. A recent study found that workers in Republican-leaning states were suffering the greatest losses from the tariffs that trading partners imposed on the U.S. as retaliation. Trump’s voters are the ones who’ve “absorbed the brunt of the pain” from the failed trade policy.