News from 2018-06-13 / KfW Research
US trade policy targets symptoms, not causes
Trade and current account balances are essentially the result of structural conditions on the supply and demand side. Unit labour costs and the saving and investment behaviour of a national economy's sectors play a crucial role. Reducing high external surpluses or deficits is definitely a sensible goal as they are signs of global imbalances. But tariffs and protectionism are the wrong way. What is required instead are measures that address the structural causes of global imbalances.
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