Trump asks China to lift tariffs on USA farm products
- Author: Wendy Palmer Mar 07, 2019,
Mar 07, 2019, 0:44
The U.S. trade deficit jumped almost 19 per cent in December, pushing the trade imbalance for all of 2018 to widen to a decade-long high of $621-billion.
For goods only, the United States deficit with the world surged to a record $US891.3 billion in 2018 from $US807.5 billion the prior year.
Including goods and services for the entire year, the total deficit is $621 billion, the highest since 2008.
Under the agreement that is being discussed, markets for farmers and financial services firms in the USA would increase, with the stipulation that China purchases farm goods and energy - such as soybeans and liquid natural gas - in high quantities, The New York Times reported.
The tariffs are part of the tit-for-tat trade war past year when China retaliated over US tariffs by targeting agriculture.
A few months back, he imposed a 10 percent tariff on an additional $200 billion and said that number would rise to 25 percent on January 1st if China did not agree to US trade demands.
What is a trade deficit?
Also, the dollar strengthened against other currencies in the latter part of 2018, making foreign goods more affordable for Americans.
With the exception of February 2017, every month of the Trump presidency has seen an increase in the trade deficit compared to the same month in the previous year. In Trump's zero-sum view of trade, a deficit indicates that America is somehow losing or being taken advantage of-you know, in the same way that a grocery store is taking advantage of you by selling you food. Harvard Kennedy School professor Jeffrey Frankel warned in January 2018 that "the increase in spending afforded by tax cuts goes entirely, rather than only partly, into the current-account deficit".
Donald Trump imposed tariffs past year on foreign steel, aluminum and Chinese products in the belief that these import taxes would ultimately reduce the trade imbalance.
"We will continue to call on China to end these counterproductive policies, free all those arbitrarily detained, and cease efforts to coerce members of its Muslim minority groups residing overseas to return to China to face an uncertain fate", she said.
While Trump often blames poor trade agreements for the trade deficit, that may not be the whole story.
While strong economic growth helped to fuel a jump in imports, a higher trade gap can also be a drag that worsens the rate of growth. Summers, along with other economists, has also challenged Trump's approach to addressing the perceived problem by adding tariffs, pointing out that these levies primarily negatively affect US consumers.
Ethanol, now hit with a 70 percent tariff at the Chinese border. US and Chinese officials have recently signalled that they're close to some kind of agreement, although China has only bolstered its commitment to investing in and developing its technology sector and questions about how to enforce any trade rules remain. In a March 2 speech to a conservative political group, he called them "the greatest negotiating tool in the history of our country" and credited them with bringing trade partners such as China to the bargaining table.
There are clear indicators that the Chinese economy is taking a hit from American tariffs.
There was a sign of de-escalation on Tuesday when the United States confirmed it's postponing "until further notice" a scheduled tariff increase on Chinese goods.
"Workers in very Republican counties bore the brunt of the costs of the trade war, in part because retaliations disproportionately targeted agricultural sectors, and in part because US tariffs raised the costs of inputs used by these counties", the authors wrote.