Will tariffs reduce the trade deficit? Expert weight
Kraman Countdown panelists Keith Fitzgerald and David Kudra unleash tariff pressure.
president Donald Trump He spent his first few weeks in the office developing his trade agenda. Part of that strategy is Trump’s belief that tariffs will help reduce the trade deficit.
After the initial announcement of 25% tariffs in Mexico and Canada, Trump said he would consider not to implement tariffs that have been delayed until at least March after the announcement of both countries, and the United States, to consider not to implement tariffs that have been delayed until March. We have to balance it out.” Border security measures.
“We have a deficit with almost every country. We are trying to change almost everything, not every country,” the president added of the wider trade deficit in America. Trump has also announced higher tariffs on products imported from China and plans to impose mutual tariffs on foreign trade partners after a review that is expected to end by April 1.
2024, US trade deficit In 2024, it rose 14% to 14% to a record of $1.2 trillion, but the US trade surplus rose 5.4% to $29.3 billion, with $918 billion in goods and services last year The net trade deficit increased from $133 billion to $133 billion. Previous year. With the aim of widening the trade deficit and narrowing it down, Fox Business spoke with expert economists about whether the trade deficit is an issue that tariffs can be corrected.
A hit record for US trade deficits that is Trump’s target
President Donald Trump has problems with the US trade deficits with other countries, and has touted tariffs as a way to narrow them down. (Chip Somodevilla / Getty Images / Getty Images)
Ryan Young, a senior economist at the competitive Enterprise Institute, says that people who buy goods and services from overseas “respect more things than they give up.” He spoke.
He added that the trade balance “doesn’t say anything about the economic health of a country, good or bad, that means that many people are making useful decisions.”
“The US has been experiencing a trade deficit every year since the 1970s, but living standards are excellent on almost every measure, whether it’s income. Unemployment ratethe percentage of low-income households with average life expectancy, air conditioning, internet, other products, or almost any other measure. If the trade deficit is harmful, then there shouldn’t be much of what we see every day,” Young said. “Trump is giving his tariffs a lot of reasons. The trade deficit should not be one of them.”
Trump signs mutual tariff plans: Economists weigh on how it works
Scott Lincicome, VP of General Economics at Cato Institute, told Fox Business Trump’s first term China’s tariffs It can serve as an example of how it affects bilateral trade between the two countries and the overall trade deficit.
“Trump has imposed a large amount of tariffs on steel and aluminum and Chinese goods. And the trade balance on both sides of the US and China has been slightly reduced. However, as GDP shares were basically flat, The overall US trade deficit did not change. “Linsicom said, noting that the trade deficit with countries like Vietnam has increased as China’s trade deficit declined.
President Trump touted the role of the US dollar World preparatory currency And recently, if they were to end their role, they threatened tariffs on the BRICS alliance countries. However, dollar status also contributes to trade deficits.
President Donald Trump has signed several executive orders related to trade and tariffs since returning to the White House. (Andrew Harnik / Getty Images / Getty Images)
Tariffs could take into account the Fed’s rate cut plan amid inflation concerns, experts say
“The US can implement a massive trade deficit for some unique reasons, which is the role of the dollar as the global reserve currency,” Linsicom said. “Because the dollar is in demand overseas, the value of the dollar actually increases. In general, stronger dollars increase imports and reduce exports.
“In that case, the trade deficit itself is a symptom of the good things the US economy and Trump likes,” he added.
Stephen Cumin, a senior fellow at the American Institute of Corporate Studies, specializing in macroeconomics and international finance, told Fox Business that it will deploy tariffs as a way to recoup the tariffs. Manufacturing industry It is unlikely that a considerable number of jobs will be reworked.
“Many of the disruption of manufacturing jobs was caused by technology changes rather than by import competition,” Cumin said. “A lot of essentially manufacturing bleeding into very low-cost countries like China, like Mexico, was inevitable. We weren’t going to maintain those jobs. Very A lot of work.”
The United States has been operating a trade deficit since the 1970s. ((Photo by Qian Weizhong/VCG via Getty Images) / Getty Images)
Camie also looked at the federal government’s finances. Finance deficit It plays a role in contributing to the US trade deficit.
“If you look at the private sector (households and businesses) in the US, they actually make more money than they spend. Consumption and investment. So basically, overall, our private sector runs a small surplus. Camiin is in the government with a big deficit. “So if we’re serious about reducing the trade deficit, we’re going to reduce the fiscal deficit.”
Click here to get your Fox business on the go
“The trade deficit is not important. The fiscal deficit is important because it leads to a higher fiscal deficit. Government debtCamir said. And if the debt is large enough, interest rates can be sky high.