The U.S. Commerce Department’s Bureau of Economic Analysis today reported that for the first two months of 2018, U.S. exports increased by 5.9 percent compared to last year as imports increased by 9.1 percent.
According to Bryan Riley, Director of NTU’s Free Trade Initiative, “Growing trade volume is a sign of a healthy U.S. economy. This good news is a welcome break from a week dominated by headlines about trade conflicts and tariffs.”
It should come as no surprise that this expansion in trade activity has coincided with an increase in economic growth and job creation. A recent report from ADP shows the economy added 241,000 jobs in March after seeing 313,000 new jobs added in February.
Riley cautioned against drawing the wrong conclusion from the BEA’s report that the U.S. trade deficit also increased. He said, “The use of the word ‘deficit’ inaccurately implies the United States is running up a debt with our trading partners. As President Reagan pointed out, a trade deficit may actually be a sign of strength.”
Reagan explained:
“During the first 100 years of our nation's history, while we were developing from an agricultural colony to the industrial leader of the world, the United States ran a trade deficit. And now, as we're leading a global movement from the industrial age to the information age, we continue to attract investment from around the world. Now, some people call this debt. By that way of thinking, every time a company sold stock it would be a sign of weakness, and it would be much better to be a company nobody wanted to invest in rather than one everybody wanted to invest in."
That is a message President Trump’s trade advisors should take to heart.