Trump Is Worried About The Trade Deficit With Germany. He Needn't Be
Trump tweeted on Tuesday that the U.S. has a "MASSIVE" trade deficit with Germany that is "very bad for the U.S." But this isn't at all the right way to think about trade deficits.
At the G-7 summit last week, Donald Trump glad-handed and posed for photo ops with leaders including German Chancellor Angela Merkel. Tuesday, however, he had some harsh words for Merkel's Germany.
"We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U.S. This will change," he tweeted on Tuesday morning.
That "MASSIVE" trade deficit is what we're going to focus on here. Trump often brings up trade deficits with other countries, but economists say that this is the wrong way to think about trade deficits. Moreover, to cast trade deficits as uniformly bad — as some sort of score of
