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San Diego experts weigh in: Do U.S. trade deficits really matter?


Friday, March 17, 2017

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Trade deficit with ChinaTrade deficit with China

Kelly Cunningham, National University System

YES: Persistent trade imbalances are unsustainable in the accumulation of foreign debt. In structural terms, the trade deficit indicates productive capacity of the U.S. economy is too small relative to spending. Deficits of such magnitude depress the American economy and will have serious political repercussions. As debt accumulation goes on, credit-worthiness will eventually crumble and the U.S. dollar will crash. Soft depreciation of the dollar is surely better than abrupt currency collapse in the future.