Consider This from NPR: Trump Takes Aim at Trade Deficits – Are They Actually Bad?

Release Date: April 3, 2025
Host: Ailsa Chang
Guest: Jason Furman, Harvard University Economist and Former Economic Adviser to President Obama

Introduction

In the April 3, 2025 episode of NPR's Consider This, host Ailsa Chang delves into President Donald Trump's renewed focus on trade deficits. The episode examines Trump's latest tariff announcements, their historical context, and the broader economic implications. Central to the discussion is whether trade deficits are inherently detrimental to the U.S. economy.

Trump's Renewed Focus on Tariffs

The episode opens with Ailsa Chang highlighting President Trump's persistent emphasis on trade deficits and tariffs. Chang notes that Trump's commitment to tariffs is longstanding, referencing his appearance on the Oprah Winfrey Show in 1988:

• Ailsa Chang [00:00]: "Whatever you think of President Trump's tariffs, there's one point you have to concede. His interest in them is not just some passing whim."
• Donald Trump [00:14]: "Great consistency, actually, because I've been talking about it for 40 years..."

Trump argues that trade deficits have been a consistent issue for decades, advocating for tariffs as a solution to protect American industries. During his recent announcement in the Rose Garden, Trump declared:

• Donald Trump [01:13]: "We have a $500 billion deficit, trade deficit with China. We're going to turn it around and we have the cards."

This marks a significant escalation from his first term, where tariffs amounted to nearly $400 billion across thousands of products. In his current term, Trump has introduced tariffs ranging from 10% to 50% on imports from virtually every country, including critical sectors like automobiles and steel.

Impact of Trump's Tariffs on Markets and Political Landscape

Chang emphasizes the immediate repercussions of Trump's tariff announcements:

• Ailsa Chang [02:10]: "The markets have plunged since his announcement. Other countries have promised to retaliate. Members of his own party have spoken out against these tariffs."

The aggressive tariff strategy has led to market instability, international retaliation, and dissent within Trump's own party, highlighting the high stakes of his trade policies.

Expert Analysis: Is a Trade Deficit Bad?

To unpack the complexities of trade deficits, Chang interviews Jason Furman, a respected economist from Harvard University and former economic adviser to President Obama.

Defining Trade Deficit:

• Jason Furman [04:57]: "A trade deficit is when you pay more money to another country in exchange for the stuff you're buying from them. Then they pay you in exchange for the things that they buy from you."

Are Trade Deficits Harmful?

Furman challenges Trump's core premise by arguing that trade deficits are not inherently bad:

• Jason Furman [05:16]: "The one thing that is definitely not bad is trade deficits with any individual country... if the trade deficit is really, really large for a really long period of time, it can be unsustainable. Don't think that's where the United States has been."

He contends that the U.S. benefits financially from trade deficits because foreign investments in the U.S. economy, such as financing government debt and building factories, return more value than American investments abroad.

The Case Against Tariffs

Furman provides a critical perspective on Trump's tariff strategy, emphasizing the unintended consequences:

Tariffs as Self-Imposed Taxes:

• Jason Furman [06:58]: "Tariffs are a tax on yourself, so it's not obvious that you want them to be higher."

He points out that while the U.S. has relatively low tariffs compared to countries like China and India, increasing them indiscriminately can harm the economy by raising costs for American businesses and consumers.

Impact on Manufacturing Jobs:

Addressing the argument that tariffs will revive manufacturing jobs, Furman counters:

• Jason Furman [08:15]: "The United States is producing more than it's ever produced in manufacturing. It's just doing it with fewer people, and that's because of the enormous increase in productivity growth."

He argues that tariffs targeting low-skill manufacturing jobs, such as those in clothing and footwear, do not align with the high-skill, high-value manufacturing that benefits the U.S. economy, like aerospace and technology sectors.

Economic Forecast and Long-Term Consequences:

Furman outlines the potential negative outcomes of Trump's expansive tariff plan:

• Jason Furman [10:33]: "Almost every economic forecaster has lowered their forecast of growth quite a lot... Almost every economic forecaster has raised their forecast for inflation. And American families should expect to see higher prices basically starting almost right away."

He warns of disrupted global supply chains, increased costs for American businesses, retaliatory tariffs from other nations, and a shift in global trade patterns away from the U.S.

Effects on Global Trade and Corporate Strategies:

Furman anticipates significant changes in global trade dynamics:

• Jason Furman [11:26]: "Term consequences you're going to see less global trade... Companies will move their factories from China to other countries."

He suggests that companies will seek to mitigate the impact of U.S. tariffs by relocating manufacturing to countries with lower tariffs, thereby diminishing the U.S.'s role in global value chains.

Conclusion

The episode concludes with a clear stance: while Trump's tariff policies aim to address trade deficits, seasoned economists like Jason Furman argue that trade deficits are not inherently harmful and that tariffs may do more harm than good. The broader consensus among economic forecasters suggests that Trump's aggressive tariff strategy could lead to slower economic growth, higher inflation, and a reshaping of global trade away from the United States.

As the episode wraps up, listeners are left to consider the complex interplay between trade policies and economic health, questioning whether Trump's approach will ultimately benefit or undermine the U.S. economy.

Notable Quotes

• Donald Trump [00:14]: "Great consistency, actually, because I've been talking about it for 40 years..."
• Donald Trump [01:13]: "We have a $500 billion deficit, trade deficit with China. We're going to turn it around and we have the cards."
• Jason Furman [05:16]: "The one thing that is definitely not bad is trade deficits with any individual country..."
• Jason Furman [06:58]: "Tariffs are a tax on yourself, so it's not obvious that you want them to be higher."
• Jason Furman [08:15]: "The United States is producing more than it's ever produced in manufacturing. It's just doing it with fewer people..."
• Jason Furman [10:33]: "Almost every economic forecaster has lowered their forecast of growth quite a lot... American families should expect to see higher prices basically starting almost right away."

Production Credits

• Producer: Connor Donovan
• Editor: Courtney Dorning
• Executive Producer: Sami Yenigun

Consider This from NPR is produced by Ailsa Chang, providing insightful analysis on pressing economic and political issues.