We think the trade deficit is a useless statistic, but many of the advocates for higher tariffs think it matters a lot.

That’s why tariff fans should pay attention to the conclusion of a new and exhaustive study by the Peterson Institute. The study examined the relationship between trade balances and average tariff rates for 137 countries across 20 years, 2000-22.

The analysis concludes:

“A 1 percentage point increase in the average tariff is associated with a 0.45 percent of GDP decline in the trade balance. In other words, tariffs are associated with increasing trade deficits.”

The results were statistically significant.

The study explains that when a nation raises its tariffs, it tends to reduce its exports – so the trade deficit remains high. So Trump’s tariffs may get better trade deals, but they aren’t likely to make our trade “deficit” any better.