Trade

Trade Deficit On Track For Another Record High

JM Ashby
Written by JM Ashby

Although Trump launched his global trade war in 2018, our overall trade deficit with the rest of the world reached a record high last year and it appears that this year will be no different.

Trump's tariffs on Chinese goods have had the side effect of slightly lowering out trade deficit with China, but our trade deficit with the rest of the world has increased by more than Trump's trade war has decreased it.

As of today, our trade deficit is still on pace to set a new record according to Commerce Department data.

The deficit slid to $52.5 billion from a revised $55 billion in August, the government said Tuesday, matching the forecast of economists polled by MarketWatch.

Yet even after the decline in September, the U.S. is still on track to post an even larger trade gap in 2019 than it did in 2018. [...]

The U.S. trade gap in goods with China has fallen 13.4% through the first nine months of this year compared to the same period in 2018. The trade war has caused repeated and large gyrations in imports and exports from month to month since the spat began a year and a half ago.

Yet the deficit with other countries is rising even faster. The U.S. trade deficit added up to $481.3 billion in the first nine months of this year, compared to $456.5 billion a year earlier.

Trump has occasionally boasted that American firms are fleeing China for other countries, but he is not intelligent enough to fully comprehend or appreciate what he's saying.

Shifting out trade deficit from one country (China) to another (Vietnam, for example) does not fundamentally alter the structure of our economy and does not achieve any of the goals his trade war is presumably suppose to achieve.

If we generously assume China will resume purchases of American agriculture under "phase one" of Trump's "greatest and biggest deal ever" at a level similar to what they purchased before the trade war began (about $20 billion per year) we can see that our trade deficit would still be higher than it was last year.

In other words, Trump could get what he wants from China and our trade deficit would still be higher.

It's difficult to fail that comprehensively.

  • muselet

    If Donald Trump were intelligent enough to understand the mechanics of trade and the realities of trade deficits, he wouldn’t be Donald Trump.

    –alopecia

  • gescove

    “It’s difficult to fail that comprehensively.” Let’s all recall that Trump managed to go bankrupt running a casino fercripessake. Rick Wilson’s book is entitled Everything Trump Touches Dies for good reason.

    • muselet

      I can’t be arsed to find the author or title—it’s been one of those days—but the (I believe) casino manager of Donald Trump’s Atlantic City property wrote a tell-all after the collapse.

      Donald Trump knew less than nothing about the casino business. In fact, the casino staff had to explain to Trump repeatedly that someone walking in off the street, plunking a quarter in a slot machine and winning a five-figure jackpot was a good thing (it was publicity they couldn’t buy, for one thing); Trump kept trying to find some way of requiring people to gamble a certain amount of money before they could win.

      It’s little wonder his casino went toes-up.

      –alopecia