Olga Ponomareva, Researcher at the Economic Policy Foundation, commented to RBC how the asymmetric reduction of tariffs between the US and China will affect the US trade deficit.
“The effect of reducing the US trade deficit will be limited, affecting primarily US-China bilateral trade flows, but the trade diversion that will obviously occur, especially in the case of trade deals with third countries, will contribute at least to import stability. This was observed as a result of the first phase of the trade war. Reducing the trade deficit can come from a reorientation towards the domestic market, as well as from expanding exports, but import substitution and building up export-oriented production requires time and resources, and trade restrictions require impressive implementation measures. The US trade deficit comes down not only to the competitiveness of foreign suppliers in the US domestic market, but also to the existing model of the US economy based on active consumer demand,” the expert said.
