If nothing else, the latest U.S. trade deficit — $621 billion in 2018 for goods and services — should give U.S. President Donald Trump a lesson in the economics of trade. Trump has insisted that a successful policy requires a trade surplus (good) and the absence of a deficit (bad). That's wrong, as many economists have argued. The economists are right.
Not only is the deficit sizable; it's also $119 billion or almost 25 percent larger than the deficit in 2016, $502 billion, the last year of the Obama presidency. By Trump's own standard, his policy has failed, even as he implausibly claims that it hasn't. Had he heeded economists, both liberal and conservative, he could have avoided this embarrassment.
He might also have seized an opportunity to educate the public about trade, because millions of Americans share his view that only exports (and the jobs tied to them) benefit the nation, while imports do the opposite (because they destroy jobs). If that were true, then the rising trade deficit would have caused a sharp decline in jobs and, possibly, even triggered a recession. We all know this hasn't happened, in part because Trump keeps reminding us of all the jobs created on his watch. That would be 4.9 million from January 2017 to January 2019.
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