James Politi and Matthew Rocco note that the US trade deficit soared in
2018 in spite of President Donald Trump’s trade policies (“Blow to Trump as US trade deficit hits 10-year high”, March 7).
Protectionism has thus failed. It will continue to fail, as it enables US producers to become technically inefficient, to ignore consumer preferences and to refrain from entrepreneurial activity. Any gains if China and the US reach a trade deal would be transitory.
The last time the US ran a current account surplus was in 1991, a few years after the leading economies agreed to reduce US budget deficits, weaken the dollar, and promote free trade.
This approach would still work today because it would address the macroeconomic forces producing the imbalances.
Senior Fellow, Research Institute of Economy, Trade and Industry,
Affiliate, Kennedy School of Government, Cambridge, MA, US
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