Noah Smith
I don’t actually think you can defeat Trump’s tariffs by arguing with them rationally, or by explaining economic theory. I mean, how do you argue with something like this?
I’ve resigned myself to the idea that the only way America is going to come to the broad realization that broad-based tariffs are bad is to experience the negative consequences first-hand — i.e., to touch the proverbial hot stove. Fortunately, I think Americans may be coming around pretty quickly.
But anyway, this is an economics blog, and so even though I don’t expect it to pay many political dividends, I thought I might as well explain why trade deficits don’t make a country poorer (though that doesn’t mean they’re OK).
Trump’s mistaken view of trade deficits
Trump and his advisors and apparatchiks believe that trade deficits constitute America being “ripped off” by foreign countries. As I explained in yesterday’s post, this is why Trump set his tariff rates at a level that he thinks will eliminate America’s trade deficit with each individual country.
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