Reducing the federal deficit won’t by itself do much to balance the U.S. trade account by increasing exports, but to the degree it involves increases in taxes or decreases in employment and income of government workers, demand for foreign imports will also decline. Such are the harsh realities of bringing an economy back into balance.
The U.S. had a trade deficit of $380 billion last year. To eliminate thisby lowering overall demand in the U.S., you’d have to reduce U.S. GDP by something like $1.5 trillion, since trade accounts for only about one-quarter of U.S. economic activity. So you’d be shrinking our economy somewhere in the neighborhood of 10 percent. Harsh realities, indeed.