Trump has angrily described trade deficits as a defeat for the United States, and aimed to erase them, but the commerce department report was bristling with records as Americans snapped up mobile phones and companies invested in computer equipment in 2018. And the USA registered the largest trade deficit in goods in its history, growing by 10% to more than $891bn a year ago.
President Donald Trump's ongoing effort to rewrite America's role in several long-standing trade agreements appears to have done little to rein in the country's ballooning trade deficit past year, as America's goods imbalance clocked in at a record $891.2 billion.
US President Donald Trump has made a reduction of the trade deficit a cornerstone of his economic policies, insisting it drains wealth from the American economy and results from concessions made to rivals by previous administrations. Although the United States has imposed tariffs of 10 to 25 percent on $250 billion in imports from China (about half of total us imports from that country), China has played its "ace-in-the-hole" by allowing it's currency to fall by roughly 10 percent against the dollar.
A significant factor in the historically large deficit are tariffs from the administration against numerous foreign-made products such as solar panels, washing machines and raw building materials like steel and aluminum. Democrats, if they play this smart, have a chance to make the case Trump is too ignorant and gullible to protect the well-being of USA consumers, workers and producers.
The "Tariff Man", who has described tariffs as "the greatest negotiating tool in the history of our country" and has said that "trade wars are good, and easy to win", created a benchmark for the success, or failure, of his trade policies.
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Yet the trade gap isn't an outright loss. You start a trade war, you should expect your exports to be hit. Computer imports also increased 0.7 billion US dollars. Unless these trends are offset by a rapid decline in the value of the US dollar, rapidly rising trade deficits could be devastating for USA manufacturing, likely giving rise to massive job loss on the scale experienced in the 2000-2007 period, when 3.5 million USA manufacturing jobs were lost. Trump has taken measures to fight trade deficits, including urging companies to manufacture in the US, and renegotiating trade deals with partners like the European Union and China.
Trump's chief trade negotiator, Robert Lighthizer, a year ago concluded a revision of the North American Free Trade Agreement, and he is now in the throes of trying to wrap up a deal with China. But while that might be of concern for Trump, many economists disagree with his emphasis on reducing the deficit.
The overall trade deficit has grown by $119 billion in the two years since Trump took office. "When things are booming we consume more imports". Exports to the rest of the world fell 1.9% to US$ 205.1bn, while imports rose by 2.1% to US$ 264.9bn. Exports of capital goods dropped 1.7 billion US dollars, led by a 1.0 billion USA dollars decline in civilian aircraft shipments. Higher imports equal bigger trade deficit.
Another is that other countries have levied their own retaliatory tariffs on our own products - most famously, red-state goods such as soybeans and bourbon. Even Trump's attempts to deal with currency issues in trade negotiations with China-or his public complaints about a strong dollar-seem unlikely to change anything.
They said Trump's $1 trillion in tax cuts and higher government spending boosted domestic consumption thereby fueling imports. Ironically, US exports to China declined but the US imported more Chinese goods. They and other Democrats should stop mimicking Trump's economic silliness, pledge to end trade wars, vow to open up markets and then outline a generous and comprehensive package to address workers and regions adversely impacted by trade.