Over the past several months the terms tariff and trade war have garnered increased attention in the media. President Trump is emphatic that the United States is engaged in several unbalanced trade relationships that require government intervention. To address these inequities, he intends to use tariffs to reduce trade deficits and expedite the renegotiation process. Tariffs are an inviting option as they can be applied in very targeted areas/products and do not require Congressional approval. Against this backdrop, we felt that this was an opportune time to discuss tariffs and the implications for the US economy.

The US has run the world’s largest trade deficit since 1975. In 2017, we imported $2.4 trillion of goods and exported $1.6 trillion, leaving a trade deficit of $810 billion. The table below, derived from the US Census Bureau, shows the five largest trade deficits and the trading partner.