The persistent U.S. trade deficit has long prompted concern, highlighted by recent tariff increases and broader debate about globalization. Some proponents of tariffs argue they can shrink the deficit and bolster the economy. Two key questions subsequently arise: Are trade deficits inherently harmful? Can tariffs meaningfully reduce them? Typically, trade deficits are viewed through a lens of exports and imports, with the latter exceeding the former. While that is a useful exercise, it’s also helpful to examine deficits through a macroeconomic lens. Drawing on that perspective, the difference between national savings ... (full story)