Mr. Donald J. Trump
Newsweek today reports this: “Trump said that if he re-enters the White House following November’s election, that he would introduce tariffs which would require China and other foreign countries to have plants to build vehicles in the U.S.” (“Donald Trump Ramps Up Threat of Tariff War if Elected President,” January 29).
While I’m distressed that you remain committed to punitively taxing Americans who buy imports, I’m delighted to learn that you’ve finally lost your aversion to U.S. trade deficits! A man of your singular genius and learning surely knows that, as a practical matter, to encourage foreigners to purchase or build more factories in the U.S. is to encourage more foreign capital to flow into the U.S. And when more foreign capital flows into the U.S., the U.S. trade deficit almost certainly rises.
Agreeing with Adam Smith that “nothing, however, can be more absurd than this whole doctrine of the balance of trade,” I’m overjoyed that you have discovered the error of your previous aversion to U.S. trade deficits – so much so that you are now actively encouraging them!
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030