Question

The United States has a large trade deficit. It has a trade deficit with each of its major trading​ partners, but the deficit is much larger with some countries​ (e.g., China) than with others. Suppose the United States eliminates its overall trade deficit​ (with the world as a​ whole). Do you expect the United States to have a zero trade balance with every one of its trading​ partners?

Answer 1

Many policymakers as well as trade analysts, do not assume that trading deficits harm the country, and caution against attempting to "protect" the trading partnership with specific countries which are crucial for the domestic industries.

Others, nevertheless, think that persistent budget deficits due to trade problems are always a concern, and there is already is considerable debate about how much of the trade deficit is triggered by foreign governments, as well as what strategies should be implemented to minimise it, if any at all.