President Trump thinks so, and Greg Ip and Jason Furman have recently written in qualified agreement. But Scott Sumner says no, and I find him much more persuasive.

Sumner’s point, in a nutshell: The sophisticated argument that our trade deficit with Germany hurts us is that it reduces aggregate demand — which I think is better understood as the total number of dollars spent in our economy. But the Federal Reserve can offset any such effect.* If the bilateral trade deficit has a negative effect on us, it’s because the Fed is failing to keep nominal spending rising at a steady and predictable clip.

* Sumner (and I) would argue that the Fed always has this power. There are arguments to the contrary that apply when interest rates are very low and the central bank cannot lower them further; but those arguments, even if sound, cannot apply to our current circumstances, when the Fed is slowly raising interest rates rather than seeking to lower them.