Mr. Chairman and members of the Senate Finance Committee: Thank you for allowing me to testify on the causes and consequences of the U.S. trade deficit. The economic turmoil in East Asia has thrust America's trade deficit back into the news. Perhaps no aspect of American trade is talked about more and understood less than the trade deficit. It has been cited as conclusive proof of unfair trade barriers abroad or a lack of …
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…but of rising domestic demand and investment. Second, the trade deficit is largely immune to changes in trade policy. Imposing new trade barriers will only make Americans worse off while leaving the trade deficit virtually unchanged. In conclusion, I would urge Congress to ignore the trade deficit and focus instead on reducing and eliminating barriers to trade, wherever they exist. Thank you for letting me speak and I would be glad to answer any questions.