The Wall Street Journal and The Washington Post Wednesday morning report that under President Trump, the US trade deficit on goods has skyrocketed to the largest in history. The irony is that those policies likely contributed to the deficit.
Reducing the gap is a key plank of Mr. Trump's policies.
When adjusted for inflation, the goods trade deficit surged $10.0 billion to a record $91.6 billion in December.
Analysts noted with irony the USA trade deficit has deteriorated despite Trump's protectionist trade policies that allegedly protect US firms from what Trump claims is unfair foreign competition.
News broke this week that Trump intends to essentially revoke preferential treatment on certain Turkish and Indian goods received when imported into the US market, drawing criticism from both countries and potentially opening American exporters up to additional hurdles when trying to reach consumers in those countries.
FILE- In this Tuesday, March 5, 2019, file photo the Cape Kortia container ship heads into the Port of Tacoma in Commencement Bay.
In December alone, the imbalance in trade, which represents the difference between the values of imported goods and services and the value of the country's sales overseas, jumped almost 19 percent to a seasonally adjusted $59.8 billion. The imbalance with Trump bete noire China hit a record $419 billion.
That's the bad news for the Trump administration and trade hawks. He has frequently labeled it an outright economic loss. Nominal goods exports to China tanked by 33% year-over-year in December, likely as a result of China's retaliatory tariffs on US goods.
There are a few takeaways from this news, including that trade was probably a bigger drag on growth a year ago than previously forecast.
McDaniel served on President George W. Bush's Council of Economic Advisors and says she often needed to convince White House officials not to see the trade deficit as the measure of good trade policy. "But there is also a strong unanimity that we should have a positive agenda with the U.S".
While goods exports hit a record $1.7 trillion in 2018, they declined in the last three months of the year, weighed by the U.S.
That's good news, because high levels of imports are a sign of a healthy economy. The tariffs are a major factor in the ongoing trade war between Washington and Beijing. Chinese purchases of US soybeans - one of America's top exports, which were targeted by China's retaliatory tariffs - fell by half previous year to $7.1 billion from $13.9 billion in 2017. He owns it. So how's the trade deficit going? One final detail, the nation's total trade gap in 2018 came to $621.0 billion, 12.4 percent deeper than $552.3 in 2017 and the deepest since 2008.
"A bilateral balance doesn't really tell you anything about what the economy is doing", Scott Lincicome, an adjunct fellow at the libertarian Cato Institute, told The New York Times past year, "just like my bilateral deficit with my grocery store doesn't tell you anything about whether I'm in debt". Higher imports equal bigger trade deficit. This shortfall also exceeded economists' estimates for a $57.9 billion shortfall. A new economic downturn would mean the trade deficit is reduced, but that's hardly an ideal situation. But his impulse to achieve faster growth through government borrowing contributed to a wider trade gap. Tariffs lead to higher prices paid by consumers, so when the president and administration officials cite an influx of tariff-related funds to the US government, USA consumers are largely the ones footing the bill.
It appears that the expansion of the trade gap is accelerating. To the extent that it provided a boost to the economy, it led to increased demand for consumer goods-many of them imported-and increased demand from businesses. That disparity has helped drive up demand for imports over exports. On the other hand, imports again rose as American consumers continued to patronize foreign-made goods, especially cheaper products from China. It followed in September with 10 percent duties on an additional $200 billion.
Trump wants to use the threat of auto tariffs as leverage to force the European Union to open up its agricultural product markets, which is nearly inconceivable. But his threat likely caused importers to bring more of their goods into the United States before January to avoid the risk of a higher tax, Stanley said.
China retaliated, and the simmering trade war roiled financial markets a year ago.
But trade battles do have consequences.
Chris Beauchamp, chief market analyst at the spread-betting firm IG, said that Trump's $1tn of tariff cuts and escalated government disbursing had augmented domestic utilization and escalated imports. He promised to turn things around by picking a few easy-to-win trade wars. If the tariffs continue, about US$165 billion worth of trade would be redirected each year, they added.