'Are trade deficits good or bad? They're both, Mr. President.'
Managing global economics isn't for everyone.
It takes levelheadedness, a knack for diplomacy, and a basic understanding of math.
<p>Unfortunately, if the recent tweets by businessman-turned-President Donald Trump are any indication, he may be lacking in all three.</p><h2>On April 4, Trump tweeted that "when you're already $500 billion DOWN, you can't lose!" </h2><iframe width="100%" height="150" scrolling="no" class="rm-shortcode twitter-embed-981521901079146499" id="twitter-embed-981521901079146499" type="lazy-iframe" data-runner-src="/res/community/twitter_embed/?iframe_id=twitter-embed-981521901079146499&created_ts=1522848031.0&screen_name=realDonaldTrump&text=When+you%E2%80%99re+already+%24500+Billion+DOWN%2C+you+can%E2%80%99t+lose%21&id=981521901079146499&name=Donald+J.+Trump" frameborder="0" data-rm-shortcode-id="6F4EPP1559347100"></iframe><p>The statement was in regards to <a href="https://www.thebalance.com/trade-deficit-by-county-3306264" target="_blank">the U.S. trade deficit</a>. America's largest deficit, by country, is with China. </p><p><strong>In recent weeks, Trump has escalated talks of a trade war with China</strong>, slapping a <a href="https://www.nytimes.com/2018/04/03/us/politics/white-house-chinese-imports-tariffs.html?rref=collection%2Fbyline%2Fana-swanson&action=click&contentCollection=undefined&region=stream&module=stream_unit&version=latest&contentPlacement=3&pgtype=collection" target="_blank">25% tariff</a> on several Chinese-made products on April 3. China retaliated by imposing its own tariffs on <a href="https://www.nytimes.com/2018/04/05/business/trump-trade-war-china.html" target="_blank">$50 billion-worth</a> of American goods, including pork and soybeans. </p><p>Many economists say these moves will <a href="http://www.latimes.com/business/hiltzik/la-fi-hiltzik-trump-tariffs-20180404-story.html" target="_blank">inevitably hurt</a> workers in U.S. agricultural and manufacturing sectors — ironically, the same industries Trump <a href="https://www.theguardian.com/sustainable-business/2017/jan/12/farmers-for-donald-trump-agriculture-policies-farming" target="_blank">vowed to protect</a>.</p><h2>The scary thing, as Jimmy Kimmel pointed out during the April 5 episode of his show, is that Trump doesn't seem to understand the complexities of trade.</h2><p>“[Trump] seems to think that if one side has a deficit, that side is losing by $500 billion," <a href="https://www.youtube.com/watch?v=SmpfavT-9zI" target="_blank">Kimmel said</a>, pointing to Trump's tweet. "That's not how trade deficits work."</p><p><strong>So, on the off-chance Trump might be tuning in that night, the late night host asked a second-grader named Shiloh</strong> <strong>to explain the concept of trade deficits to the president. </strong></p><p>It was funny, adorable — and actually really informative, too. Check it out <em>(story continues below):</em> </p><div><div data-card="youtube" data-reactroot=""><div><span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="e1fd4d4c8637e679748ab8cfe996167b"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/SmpfavT-9zI?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span></div></div></div><h2>It's OK — if global trade isn't your forte, I'll break down Shiloh's lesson. </h2><p>"What is a trade deficit?" she began the video. "It sounds like a bad thing. But really, <strong>it's just the difference between how much we buy from another country and how much we sell to that country</strong>. So, if we buy more stuff from China than we sell to them, that's a trade deficit."</p><p class="shortcode-media shortcode-media-rebelmouse-image"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xOTQ3NzAxNy9vcmlnaW4uZ2lmIiwiZXhwaXJlc19hdCI6MTYwNTE4Mjg2OH0.ix9X48oTnRInqCufni4-o8NMknCFRMRvbehPInyF6eY/img.gif?width=980" id="8255c" class="rm-shortcode" data-rm-shortcode-id="112b36eaa3091faae7487b2e7d9910ae" data-rm-shortcode-name="rebelmouse-image"><small class="image-media media-caption" placeholder="add caption...">All GIFs via <a href="https://www.youtube.com/watch?v=SmpfavT-9zI">"Jimmy Kimmel Live!"/YouTube</a>.</small></p><p>"But don't freak out," she assured viewers. "We didn't actually <em>lose</em> anything, because we have all the stuff we bought."</p><p><strong>Despite the scary name, deficits can actually be a good thing, she explained</strong> — it often indicates a strong national economy and means we have more money on hand to spend. </p><p>"But there are problems," as she pointed out.</p><p class="shortcode-media shortcode-media-rebelmouse-image"><img type="lazy-image" data-runner-src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8xOTQ3NzAxOS9vcmlnaW4uZ2lmIiwiZXhwaXJlc19hdCI6MTYzNjkxMTc1NH0.jYyQcak0C__1O1aaakQ3REL9Rsxrf0Eq1efTtorNGpw/img.gif?width=980" id="28adc" class="rm-shortcode" data-rm-shortcode-id="12d220e77a628e66c6778b28486162f4" data-rm-shortcode-name="rebelmouse-image"><small class="image-media media-caption" placeholder="add caption..."></small></p><p>Trump's more populist, protectionist ideas have some merit. She said, "Some American workers lose their jobs making stuff if we buy that stuff from other countries." Those abroad who end up with those jobs may work under dangerous working conditions and get paid less than U.S. workers would have. </p><h2>The moral of Shiloh's story? </h2><p>Trade deficits are complicated. They result in both pros and cons for us in the U.S. And the totality of their effects can't be adequately summed up in a 280-character tweet.</p><p>"So, are trade deficits good or bad? They're both, Mr. President," Shiloh concluded. "If you have any other questions, let me know. Good luck."</p>
Keep Reading Show less