What exactly is the trade deficit?
The trade deficit is simply the gap between imports into the U.S. and exports from the U.S. Imports are bigger, so there’s a deficit. Included in the figures are both goods, such as autos, and services, like banking and tourism. Who wins and who loses from the trade deficit? In the U.S., consumers win and workers lose. Consumers get cheap products and services from around the globe. Workers, though, may lose their jobs because their employers can’t compete with the influx of lower-priced goods and services from abroad. Also, demand for U.S. exports might dry up if they’re not competitive in the global market. Of course, most Americans are both consumers and workers, so they feel both the upside and the downside. How much bigger was the deficit than expected? It was at least $2 billion larger than most expectations. Exports rose 2.5%, but imports rose even more (3.5%) because the U.S. economy is growing strongly and both consumers and businesses are spending heavily. Why is the trade de
