WEBVTT 00:02.100 --> 00:04.633 align:left position:10% line:77% size:80% AMNA NAWAZ: President Trump has made the trade deficit a central focus of his agenda. 00:04.633 --> 00:09.466 align:left position:20% line:71% size:70% That's included a major escalation of tariffs and engaging in trade wars, especially with 00:09.466 --> 00:11.500 align:left position:40% line:89% size:50% China. 00:11.500 --> 00:14.966 align:left position:10% line:77% size:80% But the latest figures for the past year show the overall U.S. trade deficit keeps growing. 00:14.966 --> 00:19.966 align:left position:10% line:77% size:80% In fact, it rose by 12 percent, compared to 2017, and the trade gap is now the widest 00:20.700 --> 00:23.033 align:left position:20% line:89% size:70% it's been since 2008. 00:23.033 --> 00:27.066 align:left position:10% line:77% size:80% David Wessel of the Brookings Institution is back with us to help unpack what's behind 00:27.066 --> 00:29.733 align:left position:20% line:83% size:70% those numbers and the larger picture. 00:29.733 --> 00:31.266 align:left position:20% line:83% size:70% David Wessel, welcome back to the "NewsHour." 00:31.266 --> 00:35.233 align:left position:10% line:83% size:80% So, help us understand, how did this number get so high? 00:35.233 --> 00:37.300 align:left position:10% line:89% size:80% What's contributing to it? 00:37.300 --> 00:39.300 align:left position:20% line:71% size:70% DAVID WESSEL, Brookings Institution: Well, basically, President Trump's tariffs and the 00:39.300 --> 00:43.300 align:left position:10% line:83% size:80% retaliatory tariffs by our trading partners didn't help. 00:43.300 --> 00:47.966 align:left position:10% line:77% size:80% But the major story here is that our economy is stronger than some of the other economies 00:47.966 --> 00:50.000 align:left position:30% line:89% size:60% of the world. 00:50.000 --> 00:54.100 align:left position:10% line:77% size:80% Our demand for their stuff is growing faster than their demand for our stuff. 00:54.100 --> 00:58.966 align:left position:10% line:71% size:80% And so the trade deficit, which is the difference between our imports and our exports, is widening. 00:58.966 --> 01:02.933 align:left position:10% line:77% size:80% AMNA NAWAZ: So, the president has repeatedly talked about that gap and called it unfair, 01:02.933 --> 01:07.933 align:left position:20% line:71% size:70% and he said he was going to use those tariffs you just mentioned to try to close the gap. 01:09.133 --> 01:11.166 align:left position:20% line:83% size:70% We see it's gone the other way right now. 01:11.166 --> 01:13.766 align:left position:10% line:77% size:80% But the studies we have seen so far have showed us a little bit of what the effect of those 01:13.766 --> 01:15.400 align:left position:20% line:89% size:70% tariffs have been. 01:15.400 --> 01:16.400 align:left position:10% line:89% size:80% What do we know about that? 01:16.400 --> 01:18.433 align:left position:20% line:89% size:70% DAVID WESSEL: Right. 01:18.433 --> 01:21.233 align:left position:20% line:71% size:70% Well, first of all, the president actually deserves some of the blame for this, because, 01:21.233 --> 01:26.233 align:left position:10% line:77% size:80% when you cut taxes a lot, and you stir the U.S. economy, people buy more stuff. 01:28.233 --> 01:31.233 align:left position:10% line:77% size:80% When our budget deficit gets bigger, that tends to widen the trade deficit. 01:31.233 --> 01:35.800 align:left position:10% line:77% size:80% What the president sometimes talks about is that somehow China is paying these tariffs. 01:35.800 --> 01:40.100 align:left position:10% line:77% size:80% But these recent studies to which you refer are trying to figure out, when you have these 01:40.100 --> 01:42.633 align:left position:20% line:89% size:70% tariffs, who gets hurt? 01:42.633 --> 01:46.600 align:left position:10% line:71% size:80% Is it the exporting country or the U.S. consumers and businesses who are buying the stuff? 01:48.600 --> 01:51.533 align:left position:10% line:77% size:80% And their bottom line is, most of the burden is falling on us, the consumers and businesses 01:51.533 --> 01:55.033 align:left position:10% line:77% size:80% of the United States, who are paying more for imported stuff because of the tariffs. 01:55.033 --> 01:58.733 align:left position:10% line:77% size:80% AMNA NAWAZ: So, the burden is falling to us, but I'm also hearing you saying, because of 01:58.733 --> 02:02.733 align:left position:10% line:77% size:80% this trade deficit and the numbers, it means we're consuming more than we produce. 02:02.733 --> 02:06.766 align:left position:20% line:77% size:70% That suggests we have the cash and the ability to be able to do so. 02:06.766 --> 02:11.600 align:left position:10% line:77% size:80% So, what does the trade deficit say about the overall health or strength of our economy? 02:11.600 --> 02:16.600 align:left position:10% line:77% size:80% DAVID WESSEL: Well, sometimes, I think the trade deficit is overemphasized as a measure 02:17.333 --> 02:19.300 align:left position:20% line:89% size:70% of the economy's health. 02:19.300 --> 02:22.300 align:left position:10% line:77% size:80% It does mean, as you say, that we're consuming more than we produce. 02:22.300 --> 02:24.366 align:left position:20% line:83% size:70% We're lucky enough to be able to do that. 02:24.366 --> 02:27.533 align:left position:10% line:83% size:80% It also means that we invest more than we save. 02:27.533 --> 02:31.200 align:left position:10% line:83% size:80% We're borrowing a lot of the money to buy these imports. 02:31.200 --> 02:35.833 align:left position:10% line:77% size:80% But I think that the bottom line is that there are good ways and bad ways to get rid of a 02:35.833 --> 02:37.100 align:left position:30% line:89% size:60% trade deficit. 02:37.100 --> 02:39.100 align:left position:20% line:83% size:70% A bad way would be, we could have a recession. 02:39.100 --> 02:41.166 align:left position:20% line:83% size:70% Then we can't afford to buy things. 02:41.166 --> 02:45.233 align:left position:10% line:77% size:80% A good way to get rid of the trade deficit would be for us to save a little more or for 02:45.233 --> 02:49.133 align:left position:10% line:77% size:80% us to get a little more competitive, make better things, work more efficiently. 02:49.133 --> 02:52.066 align:left position:10% line:83% size:80% So, it's a signal that we have work to do on that front. 02:52.066 --> 02:56.100 align:left position:10% line:77% size:80% AMNA NAWAZ: So, David, does this number say to you that there's any reason for us to be 02:56.100 --> 02:57.800 align:left position:30% line:89% size:60% concerned? 02:57.800 --> 02:59.500 align:left position:20% line:77% size:70% Or, if it continues to grow, could there be reason for concern? 02:59.500 --> 03:01.233 align:left position:20% line:89% size:70% DAVID WESSEL: Yes. 03:01.233 --> 03:03.633 align:left position:10% line:83% size:80% If it continued to grow, there would be reasoned concern. 03:03.633 --> 03:05.900 align:left position:30% line:83% size:60% At these levels, it's not so bad. 03:05.900 --> 03:09.766 align:left position:10% line:77% size:80% The problem is, it's probably going to get worse, because the rest of the world is not 03:09.766 --> 03:11.200 align:left position:30% line:89% size:60% doing very well. 03:11.200 --> 03:13.266 align:left position:20% line:89% size:70% China is slowing. 03:13.266 --> 03:16.366 align:left position:10% line:77% size:80% China's actually importing less from all its trading partners, not just from us. 03:16.366 --> 03:21.033 align:left position:10% line:77% size:80% And, today, for instance, the European Central Bank marked down its forecast for growth in 03:21.033 --> 03:22.566 align:left position:40% line:89% size:50% Europe. 03:22.566 --> 03:23.933 align:left position:10% line:83% size:80% That means they're going to be buying less stuff for us. 03:23.933 --> 03:25.966 align:left position:20% line:83% size:70% So the trade deficit is going to get bigger. 03:25.966 --> 03:27.933 align:left position:20% line:83% size:70% At some point, it could get dangerously large. 03:27.933 --> 03:29.033 align:left position:20% line:89% size:70% But we're not there yet. 03:29.033 --> 03:30.266 align:left position:10% line:89% size:80% AMNA NAWAZ: We're not there yet. 03:30.266 --> 03:32.166 align:left position:20% line:83% size:70% We will continue to track it then. 03:32.166 --> 03:34.333 align:left position:10% line:77% size:80% David Wessel of the Brookings Institution, thanks for your time, as always. 03:34.333 --> 03:35.333 align:left position:10% line:89% size:80% DAVID WESSEL: You're welcome.