President Trump has imposed high and wide-ranging tariffs with a goal of reducing the US trade deficit with the rest of the world. Channel 12 News covered a talk at the Chattanooga Rotary Club by CRER director and chief economist Howard Wall. He described why economists don’t view trade deficits a bad thing and see tariffs as a net harm to the economy.
Dr. Wall said, “You have to trade more with them, you’re going to have a trade deficit if you want them to invest in you. So for overall national income or something, a trade deficit is not a negative thing.”
Dr. Wall in particular pointed towards arguments such as America’s large trade deficits, tariffs are paid for by other countries, and that they ensure fair deals are arguments he believes will have a net negative for both our regional and national economy.
He posited that the day to day American economy would not properly function without trade deficits, arguing that consumerism is a kind of trade deficit.
Dr. Wall said, “Unless all of you are farmers, I assume all of you have trade deficits with Publix or Food City, but none of you I think are imposing taxes on yourself to get rid of this terrible trade deficit with Food City.”