China has only purchased about a quarter of what Trump promised they would under "phase one" of his "biggest and greatest deal" according to the latest data available from the Commerce Department and that is now underscored by a record-shattering trade deficit.
Imports increased by a record amount in July and our trade deficit in goods also increased to an all-time record high of $80 billion in a single month.
For July, the deficit with China in goods totaled $31.6 billion, an 11.5% increase from the June imbalance.
The goods deficit with Mexico hit a record high of $10.6 in July. Trump has claimed the new free trade deal he has negotiated with Mexico and Canada will be a boon for American workers and businesses.
The United States ran a deficit in goods trade of $80.1 billion in July, the highest on record. The U.S. surplus in services, such as banking and insurance, declined to $17.4 billion, the smallest services surplus since August 2012 and a reflection in part of the decline in airline travel during the pandemic.
This is not necessarily bad news for the economy, only bad news for Trump's campaign rhetoric.
The surging trade deficit and record amount of imports is a reflection of American consumer spending fueled by coronavirus stimulus measures. Americans took their stimulus checks and pandemic unemployment benefits and they went shopping -- which is good for our consumer-based economy -- but unfortunately those measures have all expired.
It occurred to me that this could even be one reason why additional stimulus checks and unemployment have fallen out of favor at the Trump White House. Our trade deficit will likely narrow when data for August becomes available and narrow again this month and in the coming months. But it won't shrink because Trump's trade policies have suddenly and miraculously began producing their stated results; it could shrink because Americans have less money to spend.
I personally spent the bulk of the first stimulus check on summer clothes (my first set of women's summer clothes ever) that were largely made in China. And I'm not ashamed of that, it's just what I can afford. Most Americans can't afford to overpay by 50 to 100 percent just for the vanity of saying we bought something American-made, but I certainly buy American-made when the right opportunity actually present itself.
If the goal of Trump's protectionist trade policies and trade wars was to reduce our trade deficits, we can say with authority that his policies have been a failure. Our trade deficit has literally never been higher under previous presidents who all supported free and open trade.
"Trade wars are good and easy to win" -Donald Trump, 2018