What accounts for the United States’ external deficit?
Beyond cyclical fluctuations, the United States has a chronic external deficit, primarily with China and Europe. Donald Trump uses this external deficit as a reason to complain against other countries (for not opening their markets to US products, for manipulating their exchange rates). But why does it exist in the first place? Does it result from a factor external to the United States (protectionism against US products, abnormal exchange-rate depreciation) or within the United States: A savings shortfall ? Poor-quality supply of goods and services? Insufficient production capacity? High production costs? The United States’ external deficit clearly results from internal causes.