Trump economics and China–US trade imbalances

Justin Yifu Lin and Xin Wang

Introduction：

The trade deficit of the Unites States, as shown in Fig. 1, expanded from around zero before mid-1970sto peak in 2006 at $761 billion, which was around 5% of the US GDP. The trade deficit of goods was even larger, peaking at $837 billion in 2006. Though this value decreased after the 2008 global financial crisis, it was still at a remarkably high level as $752 billion in 2016.1 The trade imbalances between US and Japan and other industrialized economies contributed most to the rising US trade deficits before the 1980s, while in recent years the US runs deficits mainly against emerging Asian economies and oil-producing economies. President Trump argues that the US trade deficit was caused by unfavorable trade agreements against the US and pledges to eliminate them by bilateral renegotiations or unilateral actions.

Keywords：Trade imbalances；Border tax；Imports from China；Comparative advantages；US’s jobs