• AEA in the news
  • August 7, 2017

Dealing with trade deficits

A cargo ship maneuvers under the Bay Bridge on its way to the Port of Oakland.

Sheila_F/Bigstock

The Associated Press quoted Journal of Economic Perspectives editor Timothy Taylor in a story about trade deficits and US economic policy. The US registered a trade deficit of $43.6 billion in June and the trade gap through the first half of the year expanded nearly 11 percent from the same period a year ago. President Donald Trump has vowed to close the gap, but Taylor was among the economists quoted who said deficits were not necessarily a bad thing, nor were surpluses a sign of health. As evidence, Taylor pointed to Japan, which has a struggling economy despite having had trade surpluses for most of the past 25 years.