Are Trump’s Tariffs Bolstering the U.S. Economy? Nope – The New York Times

This is an accounting relationship, called the trade balance, and it does not tell the full story of economic activity. If consumers are paying a lot to import an amazing new widget from abroad, which American manufacturers cannot or will not produce, they are getting a benefit from that, even though the increase in imports hurts the growth number. There are multiple factors for why the size of the trade balance fluctuates, including the relative strength of trading partners’ economies and currencies — and how much money people spend or save in different countries.

It is counterintuitive, but the trade balance can still help economic growth, year to year, even if it is reducing the overall size of the economy. The deficit just needs to be smaller than it was the year before — less of a drag, if you will. A shrinking trade deficit added to G.D.P. growth as recently as 2013. (It also added during the recession years of 2008 and 2009, another sign of caution for celebrating changes in the trade balance.)

Mr. Trump hates the trade deficit, and he has repeatedly said that his tariffs will reduce it. In 2018, they did not. The deficit hit a nominal record. It subtracted two-tenths of a percentage point from G.D.P. growth, the Commerce Department calculated.


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