Despite Trump's Promises, The Trade Deficit Is Only Getting Wider

Despite Trump's Promises, The Trade Deficit Is Only Getting Wider

Despite Trump's Promises, The Trade Deficit Is Only Getting Wider

It is, by and large, an accounting measure that often moves in directions inverse to the health of the United States economy. Simultaneously, U.S. exports fell 1.9 per cent as foreign demand for civilian aircraft and oil products declined.

Lawrence Summers, a Harvard economist and former chairman of President Barack Obama's National Economic Council, told The Times that "the trade deficit is a bad metric for judging economic policy". "It's not an accident".

"What he did in North Korea was right, he must do the same thing in China - hold out, because he has the upper hand until we get China to do the right thing". The survey also supported data showing that business investment has slowed significantly due to the uncertainty surrounding the trade policy.

In other words, the 10 percent was not a tariff created to reduce the trade deficit.

The US merchandise trade deficit increased by $83.8 billion, or 10.4 percent, to $891.3 billion in the past year, the Commerce Department said. Equally ironic is the fact that Wednesday's data shows America's economy to be in strong shape.

In 2016, it was $502 billion.

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.

But there are signs that Trump is nearing a new deal with Beijing. They also point to his renegotiation of Nafta as something that will help reduce the U.S. trade deficit in the long run. Beijing is expected to offer to make eye-catching purchases of American agricultural goods to cut the trade deficit and please Trump.

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The tariffs he threatened and then imposed on Chinese imports caused a rush by importers to get ahead of the new duties that fuelled an increase in incoming traffic at West Coast ports a year ago. 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 USA consumers.

In addition to a record trade gap in goods with China, the imbalance reached new peaks with Mexico (81.5 billion dollars) and the European Union (169.3 billion dollars).

Trump and his supporters have cast the blame in part on the US Federal Reserve, arguing that its decisions to hike rates past year contributed to the strengthening of the dollar.

But Trump's trade policy also contributed materially to the growth of the gap in 2018.

But advocates of a stronger U.S. currency policy argue that Trump himself carries plenty of blame.

But most economists say that such increased Chinese purchases would likely only divert USA shipments from other foreign customers, shrinking the trade gap with China but leaving the global balance largely unchanged.

Any deal with China would mark a milestone in Trump's tariff war, though not its end.

With the trade gap growing, analysts are concerned it could slow down USA growth this year.

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