Trump’s acute nucleus on trade deficit could have an adverse effect on the economy. The pact between China and America has gone bust for now. Global markets grew sharply at least for the time being when Trump has put a hold on its threat to inflict tariffs on Chinese imports.
But with the progression of talks an eminent question for the administration remains. Is the aim to make some crusaders in farm states and energy extraction industries satisfied and diminish the trade deficit for some time?
Or is this some kind of an impaired economic relationship between the two major superpowers and world’s biggest economies, in desiring that US exercises its stronghold in the industries of the future even if they are not running into profit as yet?
However, on the weekend, Mr. Trump’s team offers an olive branch to China and seems to choose option A. The issue with the strategy is not that the ceasing of trade war may not last for long time but also it generates risk that after all the uproar of the last few months, there will be no pay offs to much graver problems.
The President has made diminishing trade deficit a main center of attention international economic policy, disregarding the perspective of mainstream economists who observe trade deficits as a result of savings and investment decisions rather than a brownie point of national success.