Fortunately, the White House backed off from insisting on numerical targets in trade agreements, even though numerical purchasing quotas were the heart of its position. Thus, what was largely a defeat for Clinton's managed-trade policy is a victory for the American consumer. But the president and his trade team may not have learned the larger lesson from their defeat. Underlying the Clinton administration's policies toward Japan is an irrational fear of trade deficits and the belief that protectionist policies are necessary to combat them. In fact, myths and faulty assumptions about trade deficits are the intellectual foundation of the administration's managed-trade policies.
Trade deficits are more a sign of strength than of weakness.
The meaning of the U.S. trade deficit is that Americans can afford to buy more goods than their foreign trading partners. This is a sign of America's wealth. But this is not the case at all. It is a mutually beneficial transaction. Both you and the grocer are winners.