I will say this about President Donald Trump, the man provides lots of teaching moments, even if he is oblivious to the lessons himself.
Take his obsession with the trade deficit.
Most economists say the gap between imports and exports doesn’t matter much. Trade flows are determined mostly by demand and transportation links. The United States runs deficits because it buys a lot and saves little, and because globalization has reduced the cost of getting goods and services to the world’s most voracious consumers.
But in Trump’s world, the deficit shows the U.S. is getting screwed by the rules of international commerce. That’s a problem for the rest of us because that simplistic idea of how the world works is now driving U.S. trade policy.
Disregard all the happy talk you hear about “win-win” trade with Trump’s America; if the Trump administration’s scorecard is the trade deficit, then it must build dams big enough to counteract the voracious demand of U.S. households. In that scenario, there can be only a winner and a loser.
New data show what it will take to reverse U.S. trade flows.