Reversing Trade Deficit Could Make America Less Great

New York Times: “Donald Trump believes that a half-trillion-dollar trade deficit with the rest of the world makes the United States a loser and countries with trade surpluses like China and Mexico winners.”

“The reality is different. Trade deficits are not inherently good or bad; they can be either, depending on circumstances. The trade deficit is not a scorecard.”

“What’s more, eliminating the trade deficit would not, on its own, make America great again, as Mr. Trump promises. And in isolation, the fact that the United States has a trade deficit does not prove that trade agreements are bad for Americans, a staple of Bernie Sanders’s campaign in the Democratic presidential primary. In fact, trying to eliminate the trade deficit could mean giving up some of the key levers of power that allow the United States to get its way in international politics.”

“Getting rid of the trade deficit could very well make America less great. The reasons have to do with the global reserve currency, economic diplomacy and something called the Triffin dilemma.”

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