Open letter to the president on the negative impact of trade deficits

Dear Mr. Trump:

There has not been a day that has gone by recently where you haven’t pointed to large dollar trade deficits (i.e. goods and services surpluses) that the US has with other countries like China, as a major reason why you are pursuing protectionist trade policies that punish average Americans for buying foreign made products. I have been searching high and low for an economic argument or historical evidence showing that dollar trade deficits (goods and services surpluses) are bad for our economy. In fact nearly all empirical evidence that I have seen suggests that the better our economy is the higher our trade deficits are and the worse our economy is the lower they are. In fact, the United States ran large trade surpluses during the entire Great Depression and large trade deficits during the booming Reagan economy of the 80s. So, given that you are vigorously pursing a policy to reduce such dollar trade deficits (goods and services trade surpluses) and I couldn’t imagine that you would be willing to have American consumers pay such a high cost without sound research showing that dollar trade deficits are harmful to the economy, would you please provide me and the American people with the evidence and analysis that you are basing your decisions on?

Sincerely,

Roy Cordato, Ph.D.

Economics

Roy Cordato / Senior Economist and Resident Scholar

Roy Cordato is Senior Economist and Resident Scholar at the John Locke Foundation. From January 2001 to March 2017, he held the position of Vice President for Research at the ...

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