Policy Documents

The Myths and Realities of Trade Deficits

Bryan T. Johnson –
July 1, 1996

The Clinton Administration’s near collision with Japan over automobiles and auto parts almost started a trade war with America’s second largest trading partner. Fortunately, however, the Clinton Adminstration backed off from insisting on numerical targets in the trade agreement, even though numerical purchasing quotas were the heart of its position. Thus, what was largely a defeat for Clinton’s managed trade policy is a victory for the American consumer.