Please note that this will help some US businesses, however hurts all US consumers: they have to pay more money for the same products. Tariffs generate in total a loss to the economy imposing them: the big advantages for some businesses never outweigh the total of small losses to all consumers.

If we had equal trade between the U. S. and the rest of the world, we would still have plenty of competition for U. S. businesses. The only firms that would survive are those that could sell on the international market – BUT with equal trade the U. S. would not be financing the improvements of competitor businesses.

Japan firms stay ahead of U. S. auto producers because they have annual profits from selling in the U. S. to fund their research.

At the moment, U. S. auto firms cannot compete.

The temporary solution is to reduce imports from the 5 countries that are responsible for 60% of the U. S. trade deficit. Tariffs should be applied to ALL imports from those 5 countries, in a gradually increasing rate, until our imports shrink to the level more nearly equal to our exports.

This is not protectionism, as traditionally defined, because it does not discriminate among products. It discriminates among countries. For a valid reason – to get closer to balanced trade.

So, the current account deficit(currently almost identical to trade deficit) means that the US are accumulating more and more debt (or, in macro economic terminology: the Net International Investment Position is negative and growing).

This means that the US needs to pay more and more interest. High consumption in the current years needs to paid off, with interest, by future generations.

Crude oil is a raw material, most of which is imported. Gasoline, diesel fuel, jet fuel, synthetic rubber, plastics, and hundreds of other products are manufactured goods produced from that raw material. Most of those manufactured goods used in the U.S. are manufactured at U.S. plants.

I’m not sure that most economists would agree that “oil is the reason for the trade deficit”.

longer term, we are injecting a great deal of volatility into the global economic system by exporting our imbalances to what will soon be the world’s largest economy. stephen roach has written ad nauseum on this, as has bill gross, etc.,. this isn’t the largest system issue – one or two serious dollar crises can correct this imbalance as china’s dollars drop in value. the largest issue us that our economy cannot continue to progress as a nation that exports manufacturing and high-margin services (the outsourcing trend in finance, software, semiconductor research and even biotech has gutted any argument that we are the only “thinkers”). this is a credit-card binge on a national scale. and like any credit binge, lenders will always keep the credit going, but only as long as it is to their advantage.

one day china’s domestic market will be larger than the US export market. when that happens, they will dump their dollars whenever they feel like making the US economy scream (to borrow a Nixon term about his designs on Chile).