Tariffs Will Destroy the Best Cure for the Trade Deficit
US exports not only reduce deficits, they also bring higher-paying jobs and greater innovation. A tariff-driven trade war will hold back their growth.
Tariffs will drive the price of US exports in the wrong direction.
Photographer: Christopher Katsarov Luna/Bloomberg
Trump’s upcoming tariff barrage is supposed to reduce trade deficits by cutting out imports. Forgotten amid all the administration’s threats and justifications is the other side of the trade equation. More exports not only reduce deficits but also bring broader economic benefits through higher-paying jobs and greater innovation. Yet in a world of global supply chains, boosting exports means upping imports as well. Widespread tariff hikes will also hold back US-based exporters.
The US is not a big trader. Just a fourth of its economy comes from international exchanges, far behind other OECD countries, in which trade averages closer to two-thirds of total economic output. And unlike in most other nations, trade’s importance in the US economy has been falling in recent years.