from: http://www.investors.com/politics/c...s-with-trade-surpluses-economically-stronger/ MERRILL MATTHEWS 6:50 PM ET Few concepts in economics are more misunderstood than the balance of trade. People seem to assume that a trade deficit is bad and a trade surplus is good, just as budget deficits — or big ones — are bad while budget surpluses are good. No president has made more of this issue than Donald Trump, who just signed an executive order asking for an assessment of "the major causes of the trade deficit." In his February address to a joint session of Congress, Mr. Trump reiterated, "Our trade deficit in goods with the world last year was nearly $800 billion dollars." Actually, it was about $750 billion... ...The president seems to imply that countries with a trade surplus are economically stronger than countries with a trade deficit. But as the table below shows, no discernible pattern emerges. Of the 10 largest economies with trade surpluses in 2015, only two had much stronger GDP growth than the U.S. ... wrong way to do it is by limiting consumers' choices, which an import tariff would do. Trying to revive American manufacturing is laudable — if it is done by removing barriers and creating an economic climate that allows companies and workers to be more competitive in a global economy. Mr. Trump should shelve his tariff for the time being and see if his other reforms will achieve his goal.
Trump is threatening a tariff if our trading partners do not lift their import tariffs and trade restrictions on US goods. This will act to decrease the trade imbalance but also maintain the principle of comparative advantage.
