Source: Cato Institute
by Scott Lincicome
“Among the most common economic justifications for tariffs today is that they’re needed to shrink a U.S. trade deficit that has long cost us jobs and dragged down economic growth. On both the left and the right (including the current occupant of the White House), trade balances — both overall and with specific countries like China or our new mortal enemy, Canada — are treated as a scoreboard for quickly judging the success or failure of U.S. trade policy and globalization more broadly. And seemingly every time the government releases the latest trade balance figures, at least one business journalist — and usually many more — will earnestly write that the U.S. trade deficit ‘improved’ (shrunk) or ‘worsened’ (increased), and that the deficit is a drag on economic growth. Yet little that I just wrote is actually correct.” (03/13/25)
https://www.cato.org/commentary/things-everyone-should-know-about-trade-deficits