Trade Balance - Liberal Resistance

Trade Balance

By Peter H. Salus

Donald Trump is dedicated to “Making America Great Again.”  To renegotiating “unfair” trade agreements.  To reducing taxes and increasing take-home pay.

Or that’s what he says.

Yet I read: “The US trade deficit grew 12.1 per cent to its highest level since 2008 in Donald Trump’s first year in office, suggesting that the president is making little headway in his promise to rewrite America’s trading relationship with the world. Economists say the surge in the US goods and services deficit to $566bn last year was mostly caused by an improving domestic economy and rising demand from consumers and companies for imported goods. US exports grew 5.4 per cent to $2.3bn, their second-highest level on record, while imports reached a record $2.9bn in 2017.” [Financial Times, 6 February 2018]

What does this mean?  Simply, it means that while US production is up, so are imports.  It means that those additional dollars (if there really are any) won’t be spent domestically.  In fact, the ratio tells us that for every dollar spent on imports, seventy-nine cents will be spent domestically.

Mr. Trump has the power to curtail those imports.  But it’s hard to see what the citizenry will purchase instead.

Are there sufficient TVs, phones, computers, DVD players, etc., manufactured in the US?