Like a lot of Americans, President Trump sees the U.S. trade deficit as an urgent problem — a symbol of U.S. economic decline.
"Any way you look at it, it is the largest deficit of any country in the history of our world. It's out of control," Trump said earlier this month when he announced proposed tariffs on Chinese imports.
Most economists, of various political leanings, are a lot less worried about the trade gap, which totaled $568 billion last year.
"I don't think it's a problem for the U.S. to have a large trade deficit," says Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University.
The United States buys a lot of products from other countries, everything from oil and chemicals to shoes and automobiles, and when it does, it pays for them in dollars, she notes. As a result, countries such as China and Japan accumulate vast piles of U.S. currency.
Those countries have to exchange those dollars for something, and for a long time they've used them to buy U.S. assets, such as stock, real estate and Treasury bills.
"Every dollar that we send in exchange for goods will come back to us from foreigners in the form of investment. In a sense, if you think about it, it's a win-win for the U.S.," de Rugy says.
Bilateral trade deficits — such as last year's $375 billion U.S. goods gap with China — are even less important, says Alan Blinder, a former Federal Reserve governor and a professor of economics.
"They're absolutely normal components of trade. I now have a very large bilateral trade surplus with my employer, Princeton University, which gives me a paycheck, and I buy almost nothing from the university," Blinder says.
"I have a bilateral deficit with the grocery store, where I buy lots of food and they buy nothing from me. That's the way trade goes," he says. Blinder says trade deficits can become a problem if foreigners suddenly stop wanting to invest in a country. That's what happened to Greece, he notes.
"When it can be a problem is when the rest of the world decides you're not such a good credit risk," Blinder says.
That hasn't happened to the United States and it doesn't appear that it will anytime soon. Foreign investors continue to shovel money into U.S. government debt, for example, resulting in a long period of low interest rates. And they're big buyers of U.S. real estate and stock.
The specter of foreigners buying up U.S. properties may disturb a lot of Americans, who view it as ceding economic control over the country's assets. But it shouldn't, de Rugy says.
"I'm French, and I can tell you these fears also exit in France," she says. "I remember the frenzy about Japanese buying our castles. It just never materialized. This fear people have that it will change the country, that it will put us at risk, it actually doesn't happen."
And with the U.S. government amassing growing amounts of debt every year, it needs the money that foreign investors offer.
"We should be happy that there are countries willing to lend us money at a lower price, because if they weren't it would mean the interest on the debt we pay would be way higher, and it would mean a bigger share of what the government spends going to interest payments," she says.
But Celeste Drake, trade and global policy specialist at the AFL-CIO, is more skeptical about U.S. trade policy.
Economists have been making lavish promises about trade agreements such as NAFTA for years. They've said trade makes U.S. companies more productive, allowing them to sell more products abroad and creating good, high-wage domestic jobs.
Instead, the trade deficit has persisted and wages for many workers have been stagnant or worse, Drake says. It's reasonable to ask how long that can continue without damaging the economy, she says.
"This is where we have to say, 'Why don't we revisit the policies that we've put in place? Why don't we start looking at this trade deficit that we've ignored for more than 30 years and to try to figure out how we can address it?' " Drake says.
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Last week, President Trump proposed new tariffs on products imported from China. The president says America is being taken advantage of by its trading partners. He says jobs are being lost because the U.S. buys more from other countries than it sells. It's a view shared by a lot of people but not by most mainstream economists. NPR's Jim Zarroli explains, starting from the shelves of a Target.
JIM ZARROLI, BYLINE: So if you walk into any big-box store or department store like this one in New York City, you can quickly see that virtually everything that's for sale is made in another country - luggage and calculators and ballpoint pens and tube socks. And President Trump says it's a big problem.
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PRESIDENT DONALD TRUMP: We have almost an $800 billion a year trade deficit with other nations - unacceptable. We are going to start whittling that down and as fast as possible.
ZARROLI: A trade deficit is the difference between what Americans buy from other countries and what they sell in those places. The notion that a trade deficit is necessarily a bad thing is one many economists of different political persuasions reject. Veronique de Rugy of the Mercatus Center at George Mason University says when the U.S. buys things from overseas, it has to pay for them in dollars, which means countries such China and Japan accumulate vast piles of dollars. They have to exchange them for something, and she says what they do is use them to buy U.S. assets, such as government bonds and stock.
VERONIQUE DE RUGY: Every dollar that we send in exchange for goods will come back to us from foreigners in the form of investment. In a sense, if you think about it, it's a win-win for the U.S.
ZARROLI: Americans get lots of consumer goods, she says, and the money comes back to the U.S. Former Fed governor Alan Blinder says it works because so many people want to invest in the United States.
ALAN BLINDER: As long as foreign investors are not only willing but happy, even eager, to do that, to buy that stuff, there's no problem running a trade deficit.
ZARROLI: Blinder says it's certainly possible that deficits become harmful at some point.
BLINDER: When it can be a problem is when the rest of the world decides you're not such a good credit risk.
ZARROLI: If for some reason investors began to see U.S. assets as less attractive, they'd buy a lot less. The dollar would fall. The government would have to pay more to borrow. And that hasn't happened, but Celeste Drake of the AFL-CIO says the trade deficit is a sign that something's seriously out of whack with the economy. Drake says economists have been making promises about trade for years. They've said foreign markets would open up and U.S. companies would begin exporting more. Instead, the trade deficit has only gotten bigger.
CELESTE DRAKE: The U.S. is running the largest and most sustained trade deficit ever recorded in history.
ZARROLI: Meanwhile, as Americans buy more products overseas, it's eliminated jobs in the U.S., and wages for many U.S. workers have been stagnant or worse. Drake says, all this suggests that the country needs to pay more attention to the trade deficit.
DRAKE: Certainly, it is a measurement that something's really quite out of balance with the American economy, and we should stop ignoring it.
ZARROLI: President Trump agrees, and he's made clear he's willing to risk a trade war to change the system. But in the process, he'll have to contend with a consumer culture that loves to buy things and enjoys the benefits that trade provides. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.