US President Donald Trump dealt blow as US trade deficit jumps

09 March, 2019, 01:22 | Author: Rachel Logan
  • Trump dealt blow as US trade deficit jumps

The total annual USA goods trade deficit ballooned to $891 billion in 2018 but the services surplus cut the overall deficit to $621 billion a year ago.

In addition to a record trade gap in goods with China, the imbalance reached new peaks with Mexico (81.5 billion dollars) and the European Union (169.3 billion dollars). Beijing's longstanding policy of subsidizing its own businesses and charges that it illicitly obtains USA technology remain key obstacles.

Businesses likely stocked up on imports in anticipation of further duties on Chinese goods, which ironically contributed to the deterioration in the trade deficit previous year.

News broke this week that Trump intends to essentially revoke preferential treatment on certain Turkish and Indian goods received when imported into the USA market, drawing criticism from both countries and potentially opening American exporters up to additional hurdles when trying to reach consumers in those countries. And although the United States imposed duties on about $250 billion of Chinese goods - more than double what China slapped on US products - the statistics suggest that the United States was hit harder than the Chinese.

What's new. The overall US trade gap in goods and services widened to $621 billion in 2018, a 12.5% increase over 2017, according to newly released USA government data.

The White House has argued that reducing the trade deficit would boost annual economic growth to its goal of 3 percent on a sustainable basis.

The tariffs may have failed their primary policy aims, but they have had other consequences-mostly negative ones. The goods deficit with China widened by $44 billion past year to reach $419 billion, nearly half the total.

But Trump's trade policy also contributed materially to the growth of the trade deficit in 2018.

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Analysts noted the US trade deficit had deteriorated despite Trump's protectionist trade policies meant to allegedly protect USA firms from what Trump claims is unfair foreign competition, especially from China. Which it did, forcing China to cease its threats of retaliation in favor of negotiating with the U.S.

US exports fell for a third straight month, mainly on account of the strong dollar that made USA products more expensive overseas.

Trump has said the tariffs are meant to protect U.S.jobs and take a stand against what he views as poor business arrangements with Beijing. Trump, the self-proclaimed "Tariff Man", has drawn bipartisan support for his tough stance with China.

New figures show that in 2018 fewer goods were exported from the U.S. than were bought by the country. In retaliation, China put $100 billion in tariffs on US goods. The result has been more imports than exports.

Our friends at NewsMax turned us on to the Gallup Organization's recent, and very extensive, polling on President Trump's handling of 14 domestic and foreign issues.

Trump had pledged both faster growth and lower trade deficits.

Christine McDaniel of the Mercatus Center at George Mason University says that should come as no surprise, given that the US runs a low saving rate and a very high consumption rate compared to other large economies like China. A higher-valued dollar, compared with other nations' currencies, makes the goods that Americans import relatively more affordable and our exports comparatively more expensive overseas. And while the widening trade gap can be seen as an embarrassing data point for the President, it underscores how the asymmetry in the U.S.

"But now, when you're getting close to victory, to relent at the eleventh hour, without achieving meaningful, enforceable and verifiable structural reform to China's trade policies, would be an abject failure of the president's China policies and people will shrug their shoulders and say what the heck did he begin this for if he won't complete it". He promised to turn things around by picking a few easy-to-win trade wars.

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