Trade Deficit Now Mostly Oil

The trade deficit is back on the rise meaning it’ll be a while yet until we unbundle those global imbalances. But take note of the fact that imports of oil now constitute the majority of the trade deficit:

TradeDeficitDec 1

It seems unlikely that getting China to increase the value of its currency is going to do anything to fix this aspect of the problem. Higher taxes on gasoline to finance investments in clean energy infrastructure and reduce the medium-term budget deficit, on the other hand, would do the trick. If you’re looking for a politically appealing alternative to gas taxes, you could probably try to rework it as some kind of tax on the oil exporters themselves. Then tax opponents could be tarred as standing up for the interests of scary Arab-looking types.