The United States can reduce its trade deficit by limiting imports through tariffs.

Question

Quizplus · Accepted Answer

Tariffs, or taxes on imported goods, would decrease the quantity of imports, but they could also lead to trade retaliation by other countries and potentially harm domestic industries that rely on imported inputs or exports. Moreover, trade deficits are influenced by various factors, such as domestic savings and investment rates, exchange rates, and global economic conditions, not simply by bilateral trade policies. Therefore, trade policy alone cannot significantly reduce a trade deficit.

The United States Can Reduce Its Trade Deficit by Limiting