Why Trump’s Intense Focus on the Trade Deficit Could Cost the Economy in the Long Run

“Could cost” no, “is costing.”

Americans have become a nation accustomed to instant gratification. If it takes time and effort, they won't do it. The Chinese know this. It's why we will lose.

I agree with the thesis of your title. It seems to me, despite the trade deficit measure, the U.S. benefits from trade. And equally, the international trading community has also benefitted. By using measures of standard of living and life expectancy, steadily increasing trade has been good for humankind. There are many factors that have contributed to the benefits of trade but two stand out prominently: transportation and energy. Harnessing hydrocarbons for internal combustion engines and generation of electricity strongly correlate with the improvement in the global standard of living and food security. The challenge that everyone in the energy business knows, is the oil, natural gas, and coal resources are finite and as the standard of living and population increases worldwide, the rate of depletion of these finite resources is accelerating. So, the critical point that must be recognized: we have a limited amount of time to shift from fossil energy to new sources. Fortunately, we have solutions. The new source I believe will be solar orbiting satellites beaming low-energy microwave energy to receiving antennae on the Earth for grid distribution. Dr. James Powell, the inventor of superconducting Maglev transport, calculates the cost per kilowatt-hour of electricity generated by a system of satellites in geosynchronous orbit and he projects a very competitive 2 cents per kwhr. Cheap electricity will assure the continued growth and prosperity based on trade.

I find it hilarious that the International Trade Administration (Whoever they are? A lobby group?) which you hotlink for data evidence has produced a pie chart within their eleven-page report where 27% goods takes up more than half the pie and 68% services takes up about a third of the pie -- a clear minority. Where I come from (hard sciences) such publications must be peer reviewed. Clearly the International Trade Administration are of questionable competence, and definitely not peer-reviewed -- a rookie error. So how can they be believed? And you, sir, quote them. This is the main problem with journalists who discuss topics beyond their ken.

Given that nobody focused the trade deficit for decades, to call focusing on it now short sighted is kind of funny.

Trump does not understand macroeconomics, even a little bit. People in this country benefit from a trade deficit with China because they can purchase, cheaply, so many items that are made in China. It is not the case that we get nothing for the deficit. We get goods. These goods, if they could be produced in the US, would cost a lot more. You can argue about child labor in offshore factories, social justice in the countries where most of our clothing is produced and how many angels can dance on the head of a pin. The fact is that the deficit does not represent a win/loss "score." In Trump's brain, this view leads to all kinds of difficulties which ultimately will make life more expensive in the US and also diminish the possibility that we could exert some influence on socio-economic conditions in other countries.

If trade deficit results in loss of jobs than the economy in the long run does not matter. Trade balance as a goal is not a bad one if it protects sectors of business and industry. If a nation keeps buying from another country the printing of its currency and documents like passport the nation will be at the mercy of another country for importing what is vital to a country. Trump is experimenting in returning to the basics of trying to achieve a trade balance and let the chips fall where they may.

Once again our great negotiator has placed placating his base and enriching his family over the good of the country. Helping soy bean exporters and getting a monetary boost for his Indonesian venture won’ help the technology exporters who are regularly deprived of their patent protection by Chinese firm’s theft of their technology. The long term harm caused by these infringements will out weight any short term gains of this agreement. The. President cannot think beyond today’s Fox headlines. He has no long term strategy to advance American interests; he is only interested in short term gains for himself be it in votes or money.

The US-Canada dispute on softwood lumber frames the present discussion on trade between the USA and China. The Office of the U.S. Trade Representativestates states: "Canada is currently our 2nd largest goods trading partner with $582.4 billion in total (two way) goods trade during 2017. Goods exports totaled $282.5 billion; goods imports totaled $300.0 billion. The U.S. goods trade deficit with Canada was $17.5 billion in 2017. "Trade in services with Canada (exports and imports) totaled an estimated $91.5 billion in 2017. Services exports were $58.7 billion; services imports were $32.8 billion. The U.S. services trade surplus with Canada was $25.9 billion in 2017. If you subtract 2017 U.S. goods "deficit" from Canadian imports from U.S. services "surplus" to Canada, the result is (25.9-17.5) $8.4 Billion U.S. goods & services "surplus" in trade with Canada. Canadian trade includes third party country (TPC) imports sourced outside Canada. The value of these TPC goods embedded in Canadian exports to the USA is a point of contention between Canada and the USA. Canada argues that supply-chains are global in nature and the mind of management, many of them U.S. global enterprises, determines how to optimize production that results in trade between Canada-U.S.A. and Mexico (NAFTA). The softwood lumber dispute has been placed before trade commissions and tribunals over the past 35 years. Canada's case against the U.S. softwood lumber industry continues to be upheld.

Plowing up what little remains of American arable land, and contaminating the water with pesticides and fertilizers for the benefit of the American farmers and Chinese doesn't sound like a good deal for America in the long run. Nor, does selling the Chinese American liquefied natural gas going to result in lower energy prices for Americans. Losing already.

The major issue is China's theft of intellectual property. It undermines our national security and hurts American (and other foreign) companies. Yet, the Trump Administration has no clue or plan to effectively respond to it.

well at least they're reducing tariffs but stealing intellectual.property is why the CCP sends it's spies here. If they don't do as they are told their families back home may suffer. This is what they think of copyright.laws. The joke in China is every copy of Windows has the same product key.

I suspect that all Trump wants is an ill-defined "win", whatever that means. His economic "team" is more like an intramural tug of war, with Navarro and Ross on one side of the rope and Mnuchin and Kudlow on the other. And since Trump hasn't the faintest idea of how international trade impacts the economy we will likely end up some short-term talking points that will not solve either the intellectual property theft or China's joint-venture requirements.

The answer to the question is exceedingly obvious. Trump will always trade future prosperity for the gratification of perceived 'WIN". A win his fellow demagogues at Fox and other unscrupulous organizations will gleefully tout and amplify, while misinforming their fans who demand ignorance be served with a heaping helping a liberal bashing. The fact that this may help rural, red America while ignoring the coast and urban centers, no matter how temporary, would be icing on the vindictive cake.

Congrats Neil on trying to figure out what this idea bankrupt, ego maniac demagogue will do. As you correctly stated for now the war has fizzled. In the end, Trump is a free trader, he will get some bones from China and other nations, declare victory and tell his adoring fans he is the greatest president since Lincoln. The lure of the demagogue throughout history has been strong.

By definition "Day Traders" are shortsighted.

Many NY Times readers are just as susceptible to let their opinions trump facts and evidence. The Donald is NOT a loser. Facts: Trump defeated a long list of Republicans and Clinton to win the US Presidency. Not everyone is disgusted with him. Evangelical leaders continue to endorse him even after the Stormy Daniels hush payment gone public. His popularity poll did not suffer. He kept his tax return secret. He did not divest his business interests. As he said, he could stand on New York’s Fifth Avenue, shoot somebody and still not lose his voters. Trump actually accomplished quite a lot in his quest to eradicate Obama's legacy. Days after moving into the WH he ripped up the TPP deal, put a conservative judge on the Supreme Court bench, withdrew from the Paris climate Accord, declared DACA dead, sharply reduced the size of two national monuments in Utah, secured a large tax cut to the rich, withdrew from the Iran JCPOA deal, etc. Coming up: dismantle Dodd-Frank banking regulations. The list of his accomplishments is quite long. (NY Times: please compile a running list). Russia helped Trump defeat Hilary Clinton. Now China is trapped in an unenviable position to help Trump stay in office. Such a windfall does not come everyday. Xi has the onerous task to keep Trump buttered up but also counteract the xenophobic attacks egged on by China-haters such as Peter Navarro and Robert Lighthizer. China owes American voters a huge thank-you, Xi is just too polite to say it.

Napoleon Bonaparte once said, " China is a sleeping giant, let her sleep. For when she awakes, she will move the world. " It is a honor to observe the natural history play out.

What do you mean "may be short*sighted"? Trump has no strategic thinking. Everything is transactional. So almost by definition everything he does IS short-sighted

It is only important when the Trump Organization isn't getting $500 million from China.

In a sudden breach of protocol Trump bypassed the double dog dare and went right for jugular with the triple dog dare and failed to negotiate a soft landing for himself when it was rebuked soundly.

Not so sorry to use an old saying but Trump can not see the forest for the trees.

It's obvious to me that both the NYTimes and too many of its readers are incapable of any kind of objectivity when it comes to President Trump and anything he does including trade issues with China. It is also obvious, at least to me, that the last several administrations have done rather poorly when it comes to China who has continued a policy of undeclared economic warfare while the US continued to act as the patsies. For all of his bluster President Trump has really been the first President in a long time to call out China for what it does (the cheating, the lying, the obfuscating, the abuse of its own workers). Perhaps, as one of the comments already made makes clear, this article belongs on the opinion section as the Times appears no longer able to provide any kind of straight news.

Why worry about trade deficits when tee time calls?

Where was the voice of the Grey Lady during the past three do-nothing administrations?

Donald Trump is incapable of understanding anything as complicated as international trade because he believes he knows everything. He famously said trade wars are easy to win. To placate the fool, the Chinese readily agreed to narrow the trade gap by buying more soya beans and LNG. Now America becomes another Brazil, Australia to China. In the meantime, they are into 5G, AI, moon shots, ..... What a deal maker.

President trump is doing great!! Heard him today at the White House with the press. The economy is great, investment in USA is at an all time high, America is respected around the world and president trump has shown he is also a man of diplomacy. But - you won't see any credit for the breakthrough with China who has been dealing unfairly with the US for years - from any editor at the NY Times. Could it be that the NY Times editors are biased, fanatic-Leftists who simply hate Trump, and can't acknowledge that he's done a LOT of good for America? I think so.

Whatever comes out of the Trump initiative to is a positive start of what I hope is a dramatic change in the way we engage our new rival, China. To be effective, a new trade regime will have to be a priority of every successive administration. Case in point: I just finished reading “China Rx” an investigative work that details how China now controls our pharmaceutical drug supply. It is a blueprint for how China targets and systematically destroys every industry.

Ah, now the trade deficit is down to 335 billion. It was 475, before that it was over 500 billion. My guess it is really 175 billion when you account what parts are made in Japan/Korea. The US needs industrial policy badly and higher taxes regain direct investment. The New Deal era was by far the most isolationist years for the US economy despite lowering tariffs through the era and it worked better than than the freewheeling flows of capital and high tariff days of the 1900-1920's. The bourgeois doesn't like that, because they lose control of the business cycle, one they don't deserve to own anyway. The horribleness of late stage capitalism and the lust for consumption is awful, morally degenerating and stagnating.

MAY be shortsighted? Has Trump done a single thing that was NOT shortsighted? This is a man who is only interested in the instant gratification he gets from constantly stirring the pot to generate headlines. The man couldn't win a game of checkers (chess requires way too much patience) - he doesn't seem capable of thinking beyond one move at a time.

"China is rising," is a statement taken for granted by those who know Asia. It is seen as a prophecy and a warning. Trump has just reneged? maybe? on a deal to protect the jobs of ZTE, a company under sanction for violating sanctions with North Korea and Iran, and which is considered a threat to the national security of the United States. American technology must be protected. Intellectual property theft and forced technology transfer by companies who want to do business in China threaten US security also. China has invested heavily in supercomputer and advanced computing. Trump put an agriculture major in charge of the Department of Energy which handles nuclear research and many of the big science projects including advanced computing. The budget is cut; grants are curtailed; and many university/business partnerships and other aspects are harmed. Pres. Obama's appointees as DOE Secretary included a Nobel scientist and the head of physics at MIT, who coincidentally ensured that the Iran nuclear deal met various nuclear standards for testing and compliance. When you do not appoint true experts -- whether in diplomacy, economics, international relations, and nuclear or other fields -- you can easily be played by intelligent foreign leaders. Trump keeps giving away the farm, and the future of American innovation, research, and advanced technologies with it.

Meanwhile we continue to educate and employ millions of Chinese nationals who will be all too happy to take the knowledge and technologies developed in the US back to China when the time is right. It’s time to drastically cut student and work visas issued to Chinese nationals, as we are training an adversary, and very like a hostile super power in the not too distant future.

If America's been ripped off by China and others for so many years (decades in Trump's mind), then how was it that -- before Trump, anyhow -- we were the wealthiest, most productive, most powerful and most influential country in the world? And it wasn't even close.

Trump is pandering to his base with his constant rhetoric that China , Germany , Japan and others are cheating on trade instead of recognizing that the real issue is we are not compeititive. Our infrastructure is crumbling, our education system is uncompeititive, too many lawyers, not enough engineers. Our health care system is far too expensive burdening individuals and companies with ruinous costs. This is illustrated by the fact European and Japanese companies will benefit from China's reduction in auto tariffs and any increase from the States will by courtesy of German companies located here. Even the prospect of increases in soybeans to China is clouded by the fact our soybeans lack the protein of soybeans from Brazil because we have focused on greed not what the customer needs. If Trump truly wants to improve our overall trade deficits he should focus on petroleum products which constitutes some 50 percent of imports. Instead he aggravated the current situation by canceling the Iran agreement and now he wants to ease up on fuel conservation measures. I can see a slogan" your pain at the pump is caused by Trump" We need conservation, renewable energy,and decrease our dependency on foreign oil this should be our trade policy

Yes, Trump's intense focus on the trade deficit is extremely short-sighted. Just like the Republican deficit hawks stultifying every Obama move to help the 99%. The bottom line in both cases is that the country will lose economically in the long run. The US is not an island.

Trump can spot a trend a mile away and call it a win. Soybean exports to China have been on an increase for years. I it is not hard or China to agree to buy more when they are doing it anyway. Same for natural gas - the US has just started to move from net importer to an exporter of gas. China was a customer in waiting. Easy to agree to buy something they had already committed to buy. Unfortunately, when Trump is involved, the natural economic system and government's 's important role in controlling and regulating it become dysfunctional. Like all things Trump, the fanfare gives way to reality after the party is over. Wait a few years, check the gas prices, have a look at crop diversity, wonder at the cost of living and why China isn't spending their extra US dollars investing in the US market. Where is government planning when you need it.

Focus on one number, trade deficit, is very short sighted. The US economy benefits tremendously from trade and business with China, in many ways that cant be measured. But Trump is the king of over simplification. I am glad he fell flat.

And yet, by backing out of NAFTA and the Iran deal, Trump has shown that the United States doesn't back it's own treaties and words. By threatening Kim with same fate as Libya he has shown that hhe cannot be trusted as an individual. When someone shows you who they are, believe them the first time.

This column begins with an incredible premise--that there was every any chance that this administration cared about the long-term future. As the New York Times itself has reported Trump is committed to undermining the Paris Climate Accords and toward undermining higher fuel efficiency standards. So it should be self-evident from the start that those in power do not care about the long term future of anyone. It appears that the effort to maintain "balance" in an age of extremes is instead disconnecting "analysis" from observable reality.

The truth is Trump doesn't care about anything unless it could pose a threat to him getting reelected. The Chinese know this, so they laser targeted his biggest supporters: rural farm communities. He had no choice but to bow to whatever demands they had, but the Chinese also know Trump is egotistical and stubborn. So rather than force him to acquiesce they sweetened the deal a little by promising to buy more soy (not that there was ever any problem selling our soy in the first place). This made it all but certain he'd agree to their demands. Trump will never fight an actual trade war with China because (1) he couldn't care less about tech workers who are generally more liberal and (2) he gets outmaneuvered at every turn by his Chinese counterparts.

This was the mantra of the Obama years: Buy cheap solar panels and other stuff from China, so that we can all be part of the exciting Economy of the Future. No matter what, be nice to China. After a few years of sacrifice, we will be pedaling cool new bikes to work at clean modern office complexes where we will do vague smart fun computer things and make lots of money. Guaranteed. If that seems like a second grader's economic fantasy, that's what it turned out to be. For too many, the Economy of the Future has been stocking shelves at a web retailer's massive warehouse or driving for a ride sharing company. Stagnant wages and an anemic business climate. Starting a trade war with China may not be prudent or smart, but as with so many of Trump's other impulsive initiatives, it is fair to ask whether we might as well try something different, given that nothing else seems to have worked so well.

I have no idea how the USA is going to get new trade deals as Trump lacks diplomacy and no use sending him on a goodwill tour as it would be a waste of money. If you send out people with diplomacy to negotiate deals he'll ruin them by tweeting threats if they don't agree to his deals. There's give and take in trade deals and our PM has proven you can refuse some of the free trade deals conditions and still have a free trade deal. It's all about compromise - something Trump only sees as one sided. Trump got quite nasty about some Asian trade deal that our new PM didn't agree with when NZ said that NZ isn't agreeing to those conditions. You have to be fair and reasonable and that applies to both sides. Our new pregnant PM did a goodwill tour of Europe when she became PM and our media is now saying that free trade talks with the European Union will begin next month.

Aren't you terrified to have Trump representing us in these, and other, negotiations? He cannot tell truth from fiction, is susceptible to flattery, and is unstable. i don't know what's worse--that he doesn't listen to his advisors or that he does.

For most of the past 2200 years China has been a demographic socioeconomic political educational technological scientific diplomatic military superpower. But for the last 500 years China surrendered that supremacy primarily to Europe. Over the last 75 years as America rose, China receded until it renounced Mao Zedong's communism under Deng Xiaoping and became socialist with Chinese characteristics aka capitalist. About 20% of the human race is ethnic Han Chinese. But while China has the nominal 2nd GDP economy, on a per capita basis it ranks 80th behind the Dominican Republic and ahead of Bulgaria. And America annually spends 3x as much on it's military as China. Moreover, due to the one-child policy and a growing middle class, the ethnic Han majority is aging and shrinking with a massive male imbalance. India is poised to pass China as the most populous nation. The trade deficit reflects relative economic natural and human resource cost realities. China has limited natural resources along with very few allies and alliances. China has lots of labor and consumers.China is Sub-Saharan Africa's #1 trading partner. China is also Brazil's #1 trading partner. Donald Trump does not know any business beyond the real estate that he inherited to build upon.

If Trump policies are pursued, US will become a 3rd world supplier of food, vegetables, nuts, grains and oil to China basically we will have same status as Mexico. US to stay ahead, needs to invest in its people, education, infrastructure. Tax cuts for corporations with ballooning deficits will destroy USA just as Trump's 6 bankruptcies.

A college graduate with a major in economics could do as well as any of these negotiators. Economics "trumps" ideology every time. When will these knuckleheads figure that out?

NZ has had a free trade deal with China for years so your nation seems to swimming against the tide. Just read in the NZ Herald that the EU has given the green light for talks on free trade deals with NZ and Australia.

Of course it's short term; Trump is incapable of thinking beyond himself and beyond tomorrow. It's a complete and embarrassing debacle, and if he knew anything at all about trade or politics or government or ANYTHING other than his own tiny family interests and ego he would be embarrassed. But then he also has no self awareness and no sense of shame. China will be the superpower of the future and Trump is just helping them along.

Few of us have enough time to wait for the future.

May be shortsighted? Par for the course with this presidency.

Xi is a strategic thinker -- smart, savvy, patient, and focused on national success the long term. Trump is a chump -- dim, delusional, impulse-driven, and focused on his personal political and financial success over the next year or two. Which country wins? How do you say "so much winning" in Mandarin?

Everything President Trump does is short sighted. He has no vision.

Wouldn't U.S. participation in the TPP deal have offered a much stronger platform from which to negotiate the long term changes in trade relations with China? Wasn't that the whole point of TPP, which took 10 years of patient work to put together? How frustratingly stupid can we be!!

So much winning...

I notice many articles in this publication carry the word 'may' or 'could' in the headline. How is this 'news'? It belongs on the opinion pages.

You can't play winning chess if you only look one move ahead. The same holds true for trade policy.

Trump sees himself as a great deal-maker while everyone else sees him as a chump. Sure, he knows how to stiff banks and contractors, how to manipulate the media, and how to use lawyers to bully people or buy them off. So far, as president he has managed to break deals but he has been unable to replace any of them with anything better as promised. He's an egotist who can be won by flattery. He knows nothing about economics or international trade or diplomacy. He surrounds himself with sycophants and ignores any expert advice. I wouldn't mind that China will eat his lunch, I mind that China will eat our lunch after negotiating with Trump.

International trade is a very complex issue with lots of players on all sides. America used to be good at that because you used to field top notch "AAA" negotiating teams. Not anymore. President Trump has no patience with anything complex. He just wants wins. And he wants them now. And, need we remind ourselves, in Trump world, a win is something that makes Him look good! The Chinese know this. They can't lose.

Focusing on bilateral trade balances solves no problems but creates new ones. The overall trade deficit is caused by macroeconomic imbalances. We nation is consuming (and investing) more stuff than we are producing and the gap is met by imports. The only way to put the trade back into balance is to the total of taxes plus savings to cover the total of government expenditures plus investment. This can be proven with some simple algebra applied to the national accounts.

Arguably the increases in trade China has offered will not benefit America much, and may even be harmful as a result of higher costs for food products and natural resources. If Trump's goal is higher employment and better paying jobs and to improve the lot of the average working American, there is no reason he should be encouraged by anything the Chinese have said so far.

China has a plan for 2025. It's not clear we even have a plan for where we want to be at 20:25. If you base your strategy soundbites and prefer reality tv level simplifications over understanding complex interactions, then you will be lucky if you even get short term gains, much less long term gains.

"American companies ................ bemoan Chinese government requirements that force American firms to form joint ventures with Chinese companies, sharing their technology. They accuse those partners of widespread theft of intellectual property............" So why do the American firms agree to form the joint ventures? If the terms are unacceptable, don't do the deal. No-one is forcing anyone to do anything. From what i have read, most of the world's car manufacturers have disassembled a Tesla to study the technologies Tesla is using, and to adopt any of them they find useful, possibly with some re-engineering to avoid direct breach of patents. The adoption of technology created by others is a common occurrence, American companies do it too, and it is not illegal in all cases. China is not eager to have foreign companies come in with wholly-owned susidiaries solely for the purpose of exploiting its labor force and developing the Chinese market for its products. For that access, the foreign company must enter into a joint venture on approved terms. What is wrong with that?

So, to set up trade agreements that will provide for prosperity in the future or to go for a short term splash at the expense of the people and generations who have to deal with it later? Well, that's an easy one for a real-estate and casino swindler who didn't even install sprinkler systems in high-rise "luxury" condominiums that don't have as many floors as you've been told you're living on.