Non-economists may find this difficult to comprehend, but CAD is equal to the difference between a country’s savings and investment. This mathematic equality is non-obvious to the lay reader, but is a reality.This means a country with a CAD cannot solve its problem by raising import duties. This will help some industries, but at the expense of others.Higher import duties mean higher prices. Protection, thus, becomes a form of cronyism where producers getting higher import tariffs make money at the expense of other producers who are already competitive.Consider the consequences of higher steel duties in the US. Trump will help these lowemployment industries at the cost of higher-employment ones.The US is spending more than it earns — that is what the investment savings gap implies.

Source: Economic Times March 13, 2018 18:00 UTC