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How Donald Trump May Actually Widen the U.S. Trade Deficit

WSJ Original article ›
LyrArc Article Gist
This exceptional report by Ian Talley in the WSJ cites trade and currency expert William Cline about the prospect of a worsening trade deficit under the Trump administration. With an improving economy, says Cline, the dollar had already surged about 8% beyond its fair market value during the last 2 years under president Obama as the economy improved. After Trump's election it surged another 3%. This makes it likely that the trade deficit could approach 4% of GDP with the stronger dollar. More protectionist policy to support U.S. industry, worsening trade deficits, more trade friction could be expected in these conditions. He does point out that markets may be overestimating what will be spent on infrastructure, and how much interest rates will go up which support a stronger dollar. Yet the fact remains that under an administration that is keen on promoting U.S. exports a dynamic is underway that makes U.S. exports actually less competitive in international markets.


The role of exports in the U.S. economic recovery by 2015-2017 and the threat posed by a stronger dollar

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The views of the U.S. Commerce Secretary Pritzker, and McNerney, head of the U.S. Export Council. About one third of the U.S. growth rate comes from exports in this economic recovery, say Pritzker and McNerney.

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