Donald Trump wants to restore the economy in a country with a shortfall of saving. This will lead to a further decrease in national saving and widening of the national trade gap.
"That dynamic unmasks the Achilles’ heel of Trumponomics: a blatant protectionist bias that collides head-on with America’s inescapable reliance on foreign saving and trade deficits to sustain economic growth," Stephen S. Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, is a senior fellow at Yale University's Jackson Institute of Global Affairs, pointed out.
This trend explains the "pernicious trade deficits" that Donald Trump has been criticizing.
Amid the lack of savings and the need to grow, the US must import surplus saving from abroad, attracting foreign capital by running current-account and trade deficits.
According to the economist, "Trumponomics" is fixated on such specific sources of the trade deficit as China and Mexico while ignoring the fact that these deficits are signs of the saving problem in the US economy.
Roach underscored that an attempt to increase national saving via protectionism and other conservative measures is "one of the most glaring disconnects of Trumponomics."
Moreover, he suggested that in the coming future the US will become even more dependent on surplus saving from abroad.
"Protectionism, anemic saving, and deficit spending make for an especially toxic cocktail. Under Trumponomics, it will be exceedingly difficult to make America great again," the author concluded.