President Trump set his sights on reducing mammoth U.S. trade deficits. In the coming week, the Census Bureau will report the U.S. last year registered the largest trade deficit in its history. How that happened is a lesson in the economics of imbalances. In this case, the president’s tax policies were as much in play as his trade policies. Large fiscal deficits had the side effect of enabling businesses and consumers to purchase more goods from abroad, driving down overall U.S. saving and driving up the trade imbalance.

Source: Wall Street Journal March 02, 2019 22:18 UTC