It is not possible to curtail imports by 20% in order to eliminate trade deficits. The reasons are as follows -
In a globally synchronized world, there is continuous trade between countries. If the United States decides to reduce imports by 20%, there will be countries that will be impacted by this decision. The resulting action will be that other countries will also curtail U.S. imports. In other words, while trying to lower imports, United States can witness decline in exports. The net result on trade deficits might be insignificant. A good example is the trade war between the United States and China. As the U.S. imposed tariffs on imports from China, the Asian country also retaliated with tariffs. Both countries suffered as a result.
The import of goods caters to consumption demand in the United States. When import of certain goods are banned, there is scarcity of the good(s). This can translate into high consumer price inflation and impact a consumption driven economy.
Therefore, there is no immediate solution to reducing trade deficits. Over time, there has to be a finer balance between production and consumption. There needs to be conducive policies and benefits for the manufacturing sectors to drive consumption demand for locally produced goods.
