The Trade Deficit Widens as Exports Plummet

Written by SK Ashby

Our trade deficit widened during the month of August to the highest level since February of this year according to Census Bureau data.

The gap could be attributed directly to Trump's trade war as the drop in exports is being driven by falling demand for American agriculture. Agricultural exports dropped by nearly 10 percent in August.

From the Wall Street Journal:

Exports fell 1.6% while imports rose 0.7% in what looks to be the worst showing since February. [...]

Americans snapped up foreign autos, which rose by 3.2% during the month. But exports deteriorated — in part because of China’s sudden resistance to U.S. soybeans, as foods, feeds and beverages exports tumbled 9.5%. China has stopped buying soybeans in retaliation to the U.S. tariffs against the second-largest economy.

Here's the thing: this isn't going to change for the better.

These are the numbers for last month. August. Trump just dramatically escalated his trade war on Monday of this week by imposing tariffs on another $200 billion in imports from China and China is going to respond by imposing retaliatory tariffs on $60 billion in American goods.

There's no reason to think Trump will call off his trade war anytime soon, but even when it's over the global market could be permanently realigned in such a way that puts American exports at a significant disadvantage. It could take many years if not literally a decade to regain market access.

The longer Trump's trade war continues, the more American exports will be replaced.