President Trump’s most consistent case for his own reelection is simple — it’s the economy, stupid. He points to a U.S. economy that is in reasonably good shape, though of course nowhere near the “best ever” he claims. Growth has averaged 2.5 percent, a bit higher than under Presidents Barack Obama and George W. Bush and a good bit lower than under Presidents Bill Clinton and Ronald Reagan. Trump promised 4 percent growth, which never materialized. But that hasn’t stopped the great salesman from repeating the refrain “promises made, promises kept.”
In fact, the one area where Trump has most clearly failed to keep his promise is central to his ideology and appeal: the trade deficit. Trump campaigned relentlessly on the notion that America’s economy was being ruined by large trade deficits. (The United States imports more goods than it exports.) He promised on the campaign trail in June 2016, “You will see a drop like you’ve never seen before.”
In reality, the trade deficit has risen substantially under Trump. It was $503 billion in 2016 and grew to $628 billion in 2018, a 25 percent spike. (It fell slightly in 2019 to $617 billion.)
When I interviewed one of Trump’s closest advisers (and son-in-law) Jared Kushner on CNN this month, he told me that it was obvious Trump was right about trade deficits being bad. When I then inquired why the trade deficit had gone up under Trump, his response was, “That’s because our economy’s growing . . . America has been outpacing the world.” This is correct, and you can see it in the historical data. In the past 30 years, when the United States has grown robustly, its trade deficit has tended to rise. If you want to achieve a sharp decline in the trade deficit, it’s easy — just trigger a recession. The greatest drop in the U.S. trade deficit took place in 2009, in the wake of the financial crisis.
Trade policy can get very wonky, so let me try to make this simple, building on a thought experiment by Roger L. Martin in the Harvard Business Review. Imagine a country that has less than 5 percent of the world’s population but still generates more than 20 percent of global gross domestic product. It buys far more goods than it sells, but it leads the world in the industries of the future — services and technology. It also has excellent laws protecting private investment and a strong, stable currency.
If you were living in another country, wouldn’t you want to invest your money there? This imaginary country, of course, is the United States. People might not buy as many American goods, but they buy lots of American services and invest their money in America.
Fareed Zakaria writes a foreign affairs column for The Post. He is also the host of CNN’s Fareed Zakaria GPS and a contributing editor for the Atlantic.