Please ensure Javascript is enabled for purposes of website accessibility
Is Our Trade Deficit Draining Jobs Like Trump Says?
18387a3caa5edeaf3362ddadf9db9f7a
By Drew Phelps
Published 7 years ago on
June 21, 2018

Share

Are those tariffs imposed by the Trump administration going to bring back jobs to the United States?
This is one of the questions addressed in New York Times economist Neil Irwin’s discussion of the trade deficit.
Irwin takes the reader through a step-by-step explanation of why a deficit in the import/export balance is not an inherently weaker position, as President Trump has alleged.

Capital Inflows as a Benefit

First, he explains the trade-offs offered by running a deficit. Of particular importance is the inflow of foreign investment as the governments we trade with seek to offset the monetary effects of importing their goods here.
As Irwin highlights, that investment can come in the form of stock and bond purchases, expansion of foreign companies fueled by tax credits, or direct investment in goods by the foreign government. These types of investments, while beneficial for the foreign entity, also offer plenty of positives for the country running the deficit.
One of the negative outcomes Irwin acknowledges, however, is one of Trump’s key talking points: Running a deficit means fewer jobs in the industries that produce goods your country is importing.
Irwin presents a counterpoint though, arguing that, if invested properly the capital inflows could offset that job loss by creating employment in other industries. He gives the example of foreign participation in the mid-2000s housing and mortgage bubble as a misplaced, unproductive investment.

The Triffin Dilemma

Irwin also details what is known as the “Triffin Dilemma,” a question of whether the provider of the global currency must run perpetual trade deficits to keep the world financial system functioning properly.
He writes that, once entangled in this dilemma, the provider country receives a mixed bag of economic effects.
On one hand, a less competitive export industry is a cost that must be accepted. On the other, the provider country enjoys lower interest rates, higher stock prices and improved standing in world finance as it become integral to interactions across the globe.
Overall, Irwin shows that the values of a trade deficit are, at the very least, worth balancing, rather than the immediate write-off they’ve received in the Trump administration.
To read Irwin’s full explanation, see here: What Is the Trade Deficit?

DON'T MISS

What Are Fresno Real Estate Experts Predicting for 2025 and Beyond?

DON'T MISS

First California EV Mandates Hit Automakers This Year. Most Are Not Even Close

DON'T MISS

Southwest Airlines To Require Chargers Be in View During Use Due to Fire Concerns

DON'T MISS

Fresno County Man Charged With Animal Cruelty After Hundreds of Dead Animals Found

DON'T MISS

The Personal Secretary and Adviser to Mexico City’s Mayor Are Shot Dead

DON'T MISS

‘Dried Out Prune’? ‘Corrupt’ and ‘Incompetent’? It’s Getting Nasty Between Springsteen and Trump

DON'T MISS

Newsom’s Budget Cuts Anger Allies and Leave the State’s Chronic Deficit Unresolved

DON'T MISS

Fresno Unified Delegation Takes Field Trip to Bus Depot

DON'T MISS

Trump Selects Concept for $175B ‘Golden Dome’ Missile Defense System

DON'T MISS

US Expected to Declare Biden Fuel Economy Rules Exceeded Legal Authority

DON'T MISS

George Wendt, Who Played a Beloved Barfly on ‘Cheers,’ Dies at 76

DON'T MISS

Fresno Supervisors Go After Catalytic Converter Thieves With New Ordinance

UP NEXT

Fresno Families Can’t Sell Their Gold Fast Enough: Jewelers

UP NEXT

Wall Street Drops, Treasury Yields Rise After Moody’s Downgrade

UP NEXT

‘Eat the Tariffs!’: Trump Warns Walmart Not to Pass Costs to Customers

UP NEXT

Moody’s Downgrades US Credit Rating Amid Rising Federal Deficit Concerns

UP NEXT

US Stocks Power Within 3% of Their Record as Wall Street Closes Out a Winning Week

UP NEXT

US Consumer Sentiment Deteriorates Further in May

UP NEXT

Conservative Republicans Revolt Over Domestic Policy Bill, Threatening Its Path

UP NEXT

Older People in Crosshairs as Government Restarts Social Security Garnishment on Student Loans

UP NEXT

Walmart Warns of Higher Prices as Trump Tariffs Start to Bite

UP NEXT

To Fix $50M Budget Hole, Fresno Will Hold Off Hiring and Make Spending Cuts

‘Dried Out Prune’? ‘Corrupt’ and ‘Incompetent’? It’s Getting Nasty Between Springsteen and Trump

10 hours ago

Newsom’s Budget Cuts Anger Allies and Leave the State’s Chronic Deficit Unresolved

10 hours ago

Fresno Unified Delegation Takes Field Trip to Bus Depot

10 hours ago

Trump Selects Concept for $175B ‘Golden Dome’ Missile Defense System

11 hours ago

US Expected to Declare Biden Fuel Economy Rules Exceeded Legal Authority

12 hours ago

George Wendt, Who Played a Beloved Barfly on ‘Cheers,’ Dies at 76

12 hours ago

Fresno Supervisors Go After Catalytic Converter Thieves With New Ordinance

14 hours ago

Musk, Republican Party’s Biggest Donor, Says He Will Cut Political Spending

14 hours ago

Fresno Smoke Shops Sue City Hall, Want to Block New Rules

14 hours ago

Why California’s Biggest Local Effort to Fight Homelessness Is Starting All Over Again

14 hours ago

Southwest Airlines To Require Chargers Be in View During Use Due to Fire Concerns

Passengers on Southwest Airlines flights will soon be required to keep their portable chargers in plain sight while using them because of co...

9 hours ago

9 hours ago

Southwest Airlines To Require Chargers Be in View During Use Due to Fire Concerns

9 hours ago

Fresno County Man Charged With Animal Cruelty After Hundreds of Dead Animals Found

9 hours ago

The Personal Secretary and Adviser to Mexico City’s Mayor Are Shot Dead

10 hours ago

‘Dried Out Prune’? ‘Corrupt’ and ‘Incompetent’? It’s Getting Nasty Between Springsteen and Trump

10 hours ago

Newsom’s Budget Cuts Anger Allies and Leave the State’s Chronic Deficit Unresolved

10 hours ago

Fresno Unified Delegation Takes Field Trip to Bus Depot

Golden Dome for America
11 hours ago

Trump Selects Concept for $175B ‘Golden Dome’ Missile Defense System

U.S. Transportation Secretary Sean Duffy speaks to the media outside the White House in Washington, D.C., U.S., May 6, 2025. REUTERS/Kent Nishimura/File Photo
12 hours ago

US Expected to Declare Biden Fuel Economy Rules Exceeded Legal Authority

Help continue the work that gets you the news that matters most.

Search

Send this to a friend