2020, Volume 73 - Issue 2
RSS feed citation: at RePEc
Publication date: 06 May 2020
THE PERSISTING US TRADE DEFICIT. IS PROTECTIONISM THE RIGHT ANSWER?Read the article
TRADE RELATION BETWEEN INDIA AND OTHER BRICS COUNTRIES: A MULTIDIMENSIONAL APPROACH USING GRAVITY MODEL AND GRANGER CAUSALITYRead the article
STRATEGIC TRADE POLICY WITH ASYMMETRIC BARGAINING AGENDARead the article
TRADE LINKAGES AND BUSINESS CYCLE CO-MOVEMENT: ANALYSIS OF TRADE BETWEEN AFRICAN ECONOMIES AND THEIR MAIN TRADE PARTNERSRead the article
Riccardo FIORENTINI, Department of Economics, University of Verona, Italy
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.
F13, F33, F41
Protectionism, Trade Deficit, Tariffs, Trump, Dollar, Savings, Investments
“Global imbalances” and the US balance of payments
Savings, investment and the US trade deficit
The dollar and the US trade deficit
Protectionism and the US trade deficit: is it working?
Tariffs and global supply chain
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