Donald Trump is making America's deficits great again

Republican tax cut will widen the trade and current-account deficits, the opposite of what was promised

US President Donald Trump and congressional Republican allies have succeeded in passing their big tax legislation. While it lacks many of the desirable attributes of true tax reform, it amounts to a success for Trump, who failed to deliver any other major piece of legislation during the first year of his administration. But what will it mean for Trump's other major promise, to cut the US trade deficit?

Simply put, the Republicans' tax law - which emphasiaes big cuts, especially for corporations and the highest-income earners - is virtually certain to widen the budget deficit and, in turn, increase the current-account deficit. Trump's legislative victory implies the return of the infamous twin deficits that followed George W Bush's tax cuts of 2001 and 2003, and Ronald Reagan's cuts of 1981-1983.

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