Why America is better off having trade deficit than imposing tariff

Trade deficits can be a problem when those deficits are due to government borrowing in countries with weak economic and political institutions

Most Americans seem to think international trade deficits are a bad thing.

A March poll, for example, showed that more than two-thirds think the U.S. should take steps to reduce the trade deficit with China, even if a resulting trade war drives up consumer prices.

That’s in large part because of the notion expressed by some that the U.S. is “losing” if it has a trade deficit, one of the main justifications used for fighting a trade war with China.

As I’ll explain, such a notion is bad economics.

Comparative advantage

One of