Contents of the volume

2020, Volume 73 - Issue 2

ISSN: 2499-8265
RSS feed citation: at RePEc
Publication date: 06 May 2020

THE PERSISTING US TRADE DEFICIT. IS PROTECTIONISM THE RIGHT ANSWER?

Riccardo Fiorentini

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GLOBALISATION AND ECONOMIC GROWTH: A PANEL DATA APPROACH

Cândida Ferreira

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TRADE RELATION BETWEEN INDIA AND OTHER BRICS COUNTRIES: A MULTIDIMENSIONAL APPROACH USING GRAVITY MODEL AND GRANGER CAUSALITY

Narayanasamy Kubendran

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STRATEGIC TRADE POLICY WITH ASYMMETRIC BARGAINING AGENDA

Luciano Fanti, Domenico Buccella

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TRADE LINKAGES AND BUSINESS CYCLE CO-MOVEMENT: ANALYSIS OF TRADE BETWEEN AFRICAN ECONOMIES AND THEIR MAIN TRADE PARTNERS

Lumengo Bonga-Bonga, Emilie Kinfack

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TECHNICAL EFFICIENCY AND ECONOMIC GROWTH IN THE SADC REGION

Mduduzi Biyase, Mokgadi Maleka, Abelwe Maluleka, Talent Zwane

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Genoa Chamber of Commerce
Economia Internazionale / International Economics

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Corresponding author

Riccardo FIORENTINI, Department of Economics, University of Verona, Italy

The Persisting US Trade Deficit. Is Protectionism the Right Answer?

Pages

155-186

Abstract

On January 22, 2018, the Trump administration imposed tariffs on $8.5 billion of imports of solar panel and $1.8 billion for washing machines. This move marked the beginning of what is now considered a trade war the USA is fighting against China and other traditional American trade partners. The “official” motivation for President Trump’s trade war is that the persisting US trade deficit depends on “unfair competition” by trade partners. Tariffs are therefore seen as a political tool for levelling the field of international trade. In this paper we present and discuss two main objections to this view: the first is that current and trade account disequilibria are ultimately due to differences between domestic savings and investments driven by macroeconomic fundamentals which in general do not depend only on the trade policies of foreign countries. The second objection consists in the fact that the role of the US dollar as the “world’s money” in the current asymmetric international monetary system makes the US trade deficit both inevitable and sustainable in the long run. Protectionist measures may reduce bilateral deficits but cannot eliminate the overall structural trade deficit unless they permanently affect the domestic savings-investment balance.

JEL classification

F13, F33, F41

Keywords

Protectionism, Trade Deficit, Tariffs, Trump, Dollar, Savings, Investments

Index

  1. Introduction
  2. “Global imbalances” and the US balance of payments

  3. Savings, investment and the US trade deficit

  4. The dollar and the US trade deficit

  5. Protectionism and the US trade deficit: is it working?

  6. Tariffs and global supply chain

  7. Concluding remarks

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