US President Donald Trump is losing his war on the US trade deficit and the evidence is growing that his own tariffs are at least part of the reason why.
The US’s monthly deficit in goods and services with the world reached its highest level in a decade in October while the deficit with China hit a record, according to data on Thursday.
The new report showed the deficit grew more than 11 per cent through October from the year before and thus pointed to an awkward emerging reality for Trump: If the pattern holds, by the end of this year the US trade deficit will have reached $600 billion for the first time. It also will have grown by more than $100 billion, or a fifth, from when Trump took office in January 2017.
Economists tend to express bemusement at Trump’s obsession with trade deficits and particularly bilateral ones. In simple terms, buying more stuff from a neighbour than they buy from you can just mean you end up with more stuff, and have more cash to buy it with. It doesn’t always mean you are worse off economically.
Yep a trade deficit isn’t that important. The fiscal deficit is far more important. But Trump is obsessed with the trade deficit, and it has grown 20% since he became President.
Through October, US exports to China were worth $102.5 billion and down almost $1 billion from the same period last year, according to US Commerce Department figures. The value of imports from China, meanwhile, was up by almost $35 billion to $447 billion.
So China is importing less from the US while the US is importing more.