Download Everything you need to know about trade economics, in 70 words

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Originally published in The Washington Post
May 5, 2017
Everything you need to know about trade economics, in 70
words
By George P. Shultz and Martin Feldstein
If a country consumes more than it produces, it must import more than it exports. That’s not a rip-off; that’s arithmetic.
If we manage to negotiate a reduction in the Chinese trade surplus with the United States, we will have an increased trade
deficit with some other country.
Federal deficit spending, a massive and continuing act of dissaving, is the culprit. Control that spending and you will control
trade deficits.
The challenge will be to do all of this without increasing long-run fiscal problems. The federal government’s debt has already
more than doubled in the past decade, reaching upward of 75% of GDP. The Congressional Budget Office projects that the
debt will grow to more than 100% of GDP in the next 15 years even without a reduction in tax revenue or an increase in
defense outlays.
George P. Shultz, a former U.S. secretary of labor, treasury and state, is a distinguished fellow at the Hoover Institution.
Martin Feldstein is professor of economics at Harvard University and former chairman of the Council of Economic Advisers
and president of the National Bureau of Economic Research.
5/8/2017