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(1/9) It would be truly great if someone in the Trump White House could learn a bit of economics. Trade deficits are the flip side of international borrowing; we run deficits because we are net borrowers; trade surplus countries are net lenders.
(2/9) Strong economies tend to make our trade deficits worse, not better, since people are consuming more when the economy is strong. Here are some data for the United States: 
(3/9) The Trump tax cuts, by reducing national savings due to the larger budget deficits, directly make our international borrowing larger, and thus increase our trade deficit. And that’s a good thing, since otherwise higher interest rates would reduce investment and growth.
(4/9) If Trump really wanted a smaller trade deficit, the path is clear: more national savings, and thus, don’t cut taxes! Bullying trading partners won’t change this logic; our deficits will continue to be large as long as our national savings falls short.
(5/9) And, in case you forgot, your daily reminder that tariffs are regressive consumption taxes. voxeu.org/article/us-tar…
(6/9) Evidence from the Trump tariffs so far gives us no reason to think that burdens are felt by foreigners. On the contrary tariff costs are passed on to consumers.
nber.org/digest/may19/w…
nber.org/digest/may19/w…
(7/9) Also, the US companies that import are the same ones that export. So, if this is about competitiveness, things are a lot more complicated than they seem!
Importers are Exporters: Tariffs Would Hurt Our Most Competitive Firms piie.com/blogs/trade-in… via @PIIE
Importers are Exporters: Tariffs Would Hurt Our Most Competitive Firms piie.com/blogs/trade-in… via @PIIE
(8/9) This is probably all bluster, but uncertainty has real costs too, as we learned in the recent study of USMCA. The benefits from USMCA lie in reducing the uncertainty surrounding the threats to NAFTA.
usitc.gov/publications/3…
usitc.gov/publications/3…
(9/9) But the biggest danger of Trumpian economic policy is the distraction. By blaming foreigners for our troubles, it distracts us from important investments we could make that would help workers today. For more, read my book Open:
amazon.com/Open-Progressi…
amazon.com/Open-Progressi…
