Jan
30

Trade Trouble

 The US has a relatively large $500 billion/year trade deficit, 2.5% of GDP. While tariffs on solar panels and washing machines may slightly boost US manufacturing activity, they may also encourage trade retaliation. Think of China buying planes from Airbus, not Boeing. The only ways to reduce a trade deficit are via boosting savings or currency depreciation, which both reduce living standards, and in the process reduce demand for imports.

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