US claims on trade deficit challenged
Expert warns hefty levies cannot address broader economic issues
US fiscal policy and consumption patterns, as well as other domestic factors, are the main drivers of the US' persistent trade deficit, not foreign trade practices or trade liberalization, an economist has found.
"It makes little sense … to blame the trade deficit for the decline in manufacturing employment," said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, or PIIE, during a Brookings Papers on Economic Activity conference on March 27.
His paper, "The US Trade Deficit: Myths and Realities", directly challenges beliefs often cited in political discourse as the government intensifies trade measures, drawing concern from trade partners.
