AMNA NAWAZ: President Trump
has made the trade deficit a
central focus of his agenda.

That's included a major
escalation of tariffs
and engaging in trade
wars, especially with

China.

But the latest figures for the
past year show the overall U.S.
trade deficit keeps growing.

In fact, it rose by 12 percent,
compared to 2017, and the
trade gap is now the widest

it's been since 2008.

David Wessel of the Brookings
Institution is back with us
to help unpack what's behind

those numbers and
the larger picture.

David Wessel, welcome
back to the "NewsHour."

So, help us understand, how
did this number get so high?

What's contributing to it?

DAVID WESSEL, Brookings
Institution: Well,
basically, President
Trump's tariffs and the

retaliatory tariffs by our
trading partners didn't help.

But the major story here is
that our economy is stronger
than some of the other economies

of the world.

Our demand for their stuff
is growing faster than
their demand for our stuff.

And so the trade deficit,
which is the difference
between our imports and
our exports, is widening.

AMNA NAWAZ: So, the president
has repeatedly talked about
that gap and called it unfair,

and he said he was going
to use those tariffs
you just mentioned to
try to close the gap.

We see it's gone the
other way right now.

But the studies we have seen
so far have showed us a little
bit of what the effect of those

tariffs have been.

What do we know about that?

DAVID WESSEL: Right.

Well, first of all,
the president actually
deserves some of the
blame for this, because,

when you cut taxes a lot, and
you stir the U.S. economy,
people buy more stuff.

When our budget deficit
gets bigger, that tends to
widen the trade deficit.

What the president sometimes
talks about is that somehow
China is paying these tariffs.

But these recent studies to
which you refer are trying to
figure out, when you have these

tariffs, who gets hurt?

Is it the exporting
country or the U.S.
consumers and businesses
who are buying the stuff?

And their bottom line is, most
of the burden is falling on us,
the consumers and businesses

of the United States, who
are paying more for imported
stuff because of the tariffs.

AMNA NAWAZ: So, the burden is
falling to us, but I'm also
hearing you saying, because of

this trade deficit and the
numbers, it means we're
consuming more than we produce.

That suggests we have
the cash and the ability
to be able to do so.

So, what does the trade deficit
say about the overall health
or strength of our economy?

DAVID WESSEL: Well, sometimes,
I think the trade deficit is
overemphasized as a measure

of the economy's health.

It does mean, as you
say, that we're consuming
more than we produce.

We're lucky enough to
be able to do that.

It also means that we
invest more than we save.

We're borrowing a lot of the
money to buy these imports.

But I think that the bottom
line is that there are good ways
and bad ways to get rid of a

trade deficit.

A bad way would be, we
could have a recession.

Then we can't afford
to buy things.

A good way to get rid of the
trade deficit would be for us
to save a little more or for

us to get a little more
competitive, make better
things, work more efficiently.

So, it's a signal that we
have work to do on that front.

AMNA NAWAZ: So, David, does
this number say to you that
there's any reason for us to be

concerned?

Or, if it continues
to grow, could there
be reason for concern?

DAVID WESSEL: Yes.

If it continued to grow, there
would be reasoned concern.

At these levels,
it's not so bad.

The problem is, it's probably
going to get worse, because
the rest of the world is not

doing very well.

China is slowing.

China's actually importing
less from all its trading
partners, not just from us.

And, today, for instance, the
European Central Bank marked
down its forecast for growth in

Europe.

That means they're going to
be buying less stuff for us.

So the trade deficit
is going to get bigger.

At some point, it could
get dangerously large.

But we're not there yet.

AMNA NAWAZ: We're not there yet.

We will continue
to track it then.

David Wessel of the Brookings
Institution, thanks for
your time, as always.

DAVID WESSEL: You're welcome.