This Deutsche Bank research paper examines the drivers of the U.S. trade deficit and evaluates the impact of the Trump Administration’s tariff policies. While tariffs may offer short-term reductions in the trade deficit, they come with significant economic costs and may not provide a sustainable solution.
Tariffs and the US Trade Deficit, Where Are We Headed?
Deutsche Bank
Peter Hooper
Research
26 Pages
Key Takeaways
Tariffs may reduce the deficit: Tariffs could narrow the trade deficit due to a weakening dollar and limited foreign retaliation.
Economic costs are substantial: Tariffs are likely to cause higher prices and reduced output with long-lasting effects.
Alternative solutions exist: Other deficit-reduction strategies may be more effective but face political hurdles.
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