Despite Trump's Promises, The Trade Deficit Is Only Getting Wider
- Author: Joey Payne Mar 08, 2019,
Mar 08, 2019, 0:45
While Trump appears to be on the verge of a deal with China that will see it make some trade concessions and agree to buy significantly more USA agricultural product and energy, which might be regarded as a win, increased Chinese purchases of U.S. products will essentially cause a redirection of trade - and the trade deficits - unless the United States is able to greatly expand capacity and improve its export competitiveness.
The president thus begins his reelection drive with a core campaign promise unfulfilled, the Post noted, and with a recent flurry of economic research showing that his embrace of tariffs is damaging the US economy.
But soybean exports, a crucial crop across vast expanses of the country, fell 18 percent for the year to $18.2 billion amid a Chinese boycott sparked by Trump's trade war.
While goods exports hit a record $1.7 trillion in 2018, they declined in the last three months of the year, weighed by the U.S.
When you get down to it, tariffs and other trade barriers aren't the main influence on national trade deficits or surpluses.
When adjusted for inflation, the goods trade deficit surged $10.0 billion to a record $91.6 billion in December.
"Exports increased $148.9 billion, or 6.3 percent".
The OECD on Wednesday cut its global growth forecast for 2019 by two tenths to 3.3 percent, citing trade tensions and political uncertainty.
"We find that the USA tariffs were nearly completely passed through into USA domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters", according to the report. "Bigger than ever" is a favourite Trump phrase, although I suppose he's reluctant to boast about what he regards as a bigger-than-ever bad thing.
Donald Trump claims that the USA is being "ripped off" by other nations and wants countries to lower their tariffs on United States goods and buy more of them.
China has offered to buy a reported US$1.2 trillion in additional American products over the next six years in a deal that reportedly would ease each side's tariffs, usher in changes to Beijing's state-led economic model and include tough new enforcement mechanisms. "We can turn it all around - and we can turn it around fast", he said. Beijing is expected to offer to make eye-catching purchases of American agricultural goods to cut the trade deficit and please Trump.
"We compute that tradeable real wages fall the most in heavily GOP counties because of the [trade] war", the study found.
"The risk could be more to the downside, but on the other hand this would take away some certainty and that is good for companies looking to invest", said Sebastien Page, head of global multi-asset strategy at T. Rowe Price in Baltimore. We were at the tail end of the Great Recession then, and, because the economy was bad, Americans bought less stuff from overseas.
The tariffs may have failed their primary policy aims, but they have had other consequences-mostly negative ones.
EU Trade Commissioner Cecilia Malmstrom is in Washington this week and due to meet later Wednesday with US Trade Representative Robert Lighthizer as they prepare for formal negotiations.