Here's What's Behind the U.S. Trade Deficit

The video discusses the trade deficit, explaining it as a result of consuming more than producing. It highlights the link between fiscal and trade deficits, noting that tax cuts and fiscal deficits can increase the trade deficit. The discussion shifts to NAFTA, examining US-Mexico trade relations and tariffs, and debunking myths of unfairness. It concludes with suggestions for modernizing NAFTA to include e-commerce and data flows, reflecting changes in the global economy.

What is a primary cause of a trade deficit according to the discussion?

• High tariffs on imports

• Consuming more than producing

• Exporting more than importing

• Increasing domestic production

How can a country reduce its trade deficit?

• By increasing taxes

• By saving more and spending less

• By importing more goods

• By blaming other countries

What effect does cutting taxes and running a fiscal deficit have on trade?

• It decreases the trade deficit

• It has no effect on trade

• It balances the trade deficit

• It increases the trade deficit

What is a misconception about the US-Mexico trade relationship under NAFTA?

• NAFTA includes e-commerce regulations

• Mexico has lower tariffs than the US

• The trade relationship is unfair to the US

• The US benefits more than Mexico

What is a suggested area for modernizing NAFTA?

• Increasing tariffs on goods

• Focusing on old-fashioned goods

• Reducing service trade

• Including e-commerce and services