Why Trump hates the U.S. trade deficit and what that means for you

At the core of President Donald Trump’s decision to impose sweeping tariffs on U.S. trading partners is a fixation on closing, if not reversing, America’s trade deficit with nearly all of them.

But most economists say Trump appears to demonstrate a fundamental misunderstanding of what having a trade deficit with another country actually means — a fact that is at the heart of the stunning market meltdown over the past several days.

A trade deficit simply means a country is importing more goods and services from a given country than it is exporting to them.

Maintaining a deficit usually says little about the state of a country’s economy. The U.S. trade deficit instead simply reflects the fact that the U.S. is a consumption-based economy. Even with the deficit, the U.S. has maintained strong domestic growth.

Whether it is sourcing goods that the U.S. no longer produces, or which can be produced more cheaply elsewhere, large American import levels reflect strong demand for goods — and the U.S. economy as a whole generally benefits from this arrangement, said Vance Ginn, an economist and adviser in Trump’s first term.

“Trade helps us to be better off,” Ginn told NBC News.

As the Congressional Research Service reported in 2018, Trump’s fixation on reversing the deficit “contrasts with the views of most economists.”