Biggest absolute number in history, biggest adjusted for inflation in at least 10 years. Trump is #1 in trade deficits!
I’d say this would be good fodder for political attacks against Trump, but based on polling, most of his supporters don’t seem actually interested in any facts, preferring to just go by whatever Trump says. So I expect Trump will either deny this report from his own cabinet (and call it fake news) or insist that it’s actually great news, despite his earlier harping on the size of the trade deficit. And this will be fine with most of his supporters, I imagine.
If anything, it shows, yet again, how utterly incompetent his administration in accomplishing presumably their highest priorities (based on his campaign).
Trump took office promising to cut taxes, slash regulations, and pursue policies that would support job growth and economic growth. By any measure, it’s been a success. 7 quarters of economic growth above 2%, unemployment rate holding at a remarkably low level, stock market up, manufacturing doing well, and wages rising quickly. So to summarize it all in one quick statement, American are making lots and lots of money.
And what are they doing with that money? Well, they’re doing lots of different things, but many of them are spending some of their money on buying stuff from foreign countries. Fancy cars from Europe, clothes from sweatshops in Asia, coffee and chocolate from South America and Africa, and all kinds of other stuff from all over the world. Thus we get an increasing trade deficit.
It’s an obvious result of the roaring economy that we’ve enjoyed under Trump. Are the Democrats planning to attack Trump on the grounds that the economy is growing?
If we had a normal Republican president, you’d be right. But we don’t.
The current occupier of the Oval Office, unindicted co-conspirator Donald John Trump, is clueless about trade and trade deficits. He thinks that a big trade deficit means the United States is losing. Are any of the sycophants around him going to tell him he’s wrong about that? Would he listen if they did?
Every time some news article links him and the largest trade deficit, he will feel like a loser. Every time he goes off-script about the trade deficit, he’ll react like a loser. Sometimes his disconnect with reality helps Republican politics; this is a case where it hurts them. It can only help Democrats to bring up the large trade deficits every chance they get.
Some of that trade deficit is the result of Trump’s tax cut last year, which brought in foreign investment. Tax cuts also spike domestic demand, which makes domestic products more expensive relative to foreign goods of similar value. The repatriation of corporate earnings did, in fact, occur as a result of the tax cuts, but there’s no evidence that the money has been used to boost American employment. What is evident, however, is that we have a record trade deficit at a time we have a record budget deficit – party like it’s 2005.
Maybe Trump is some sort of idiot savant at economic policy. He’s growing the economy, but he has no idea how! Or maybe our current economic conditions still don’t really have that much to do with the Trump Administration’s policies; which, apart from a giant tax cut–and concomitant enormous increase in the federal budget deficit*–haven’t really amounted to much. (I don’t actually think either Republican or Democratic, conservative or progressive Presidents have some kind of magical “GROW JOBS” button on their desks in the Oval Office, right next to the “LAUNCH THE NUKES” button–don’t get those two buttons mixed up, guys!)
*In that same speech Candidate Trump complained about our “massive budget deficit”; now our course the federal budget deficit is even massive-er.
I mostly agree with ITR. The economy Is doing pretty well. But it is worth noting
-Trump tilted at the windmill of trade deficits Big Time. He started a trade war, including with Canada on national security grounds (!), the effects of which I don’t think have fully played out. But without cracking the trade deficit. Some speculate he is using exemptions to tariffs as goodies he corruptly hands out to favored entities.
-The tax cuts help those that need it least, in exchange for ballooning the deficit which is in turn goading the Fed to raise rates. Spoiler, the theme here is “effects have not fully played out.” The 10+ years of expansion is characterized by, among other things, loose Fed policy. Under Trump, that is changing.
-The stock market is out of step with fundamentals:
Things are still going OK, but the market is running away from economic indicators. Eventually something has to give. Careful hanging your hat on the stock market!
We can’t credit Trump too much until he is in retrospect. Current conditions seem like a continuation of previous trends. The changes Trump has introduced carry consequences that… Wait for it… haven’t fully played out yet.
Remember when Obama said you could keep your doctor after the ACA was passed? And when some people had to change due to their really terrible “insurance”, R’s harped on it until yesterday (I haven’t heard it yet today, but the day is still fairly young).
Trump has already bragged how much the trade deficit has fallen:
Maybe he should've talked to someone about what might actually happen. Oh wait, he's the smartest person on the planet. :rolleyes:
By itself, neither a surplus nor a deficit in trade (or the current account more generally) is good or bad. In fact, the current accounts of all the world’s countries will sum to zero, so if some countries are running surplus, some will have to run deficit. However
(1) A continual current account deficit is unsustainable in the very long term. If a weakening dollar causes the U.S. to lose its allure as an investment haven, a vicious cycle could ensue.
(2) It is logical that developed countries should save and invest some of the savings in developing countries; this is especially true when the savings are needed to fund future retirements. This is why the non-Anglophonic developed countries — Germany, Switzerland, Holland, Japan, etc. — run large surpluses. The U.S. also ran surpluses until about 1982. But now, instead of U.S. capital flowing to opportunities in developing countries, U.S. people spend instead of save, and money from developing countries flows to the U.S. Much of this foreign “investment” in the U.S. just fuels asset price inflation.
Asset price inflation is seen in today’s high prices for stocks, bonds, and homes. Will the bubble burst, or will it fizzle sedately and safely? Nobody knows for sure.
Yes, in addition to declaring your NORAD/NATO partner to be a threat to national security, Trump has also been granting exemptions from his tariffs on steel and aluminium which he imposed on Canada and others, apparently as part of his trade war with China.
Guess who’s been benefitting from most of the exemptions? Chinese steel and aluminium exporters. Canadian steel and aluminium exporters, on the other hand, are finding it very difficult to get exemptions.
So that tariff war with China is looking as odd as almost everything else he introduces.
And so what? Nobody who’s watched Trump for the past four years expects consistency from him. He promised that Mexico would pay for the border wall. Then he shut down the government and vowed he would keep it closed for years, until Congress agreed to make the American taxpayers pay for the wall.
Better question: what makes anyone think that when Trump says “A”, and then later says “not A”, it will actually help the Democrats deal with him?
Tangible results do not matter. It’s all about image to him and his ilk. He kicked China in the balls and then turned around and kicked the fereral government in the ass. Like in an action movie - they only see the massive explosions, not the clean up crew hard at work afterwards.
It probably should have been expected. The 2017 tax cuts boosted individual and corporate post-tax incomes in 2018, which meant a boost to overall demand. That demand increased overall spending, not just domestic spending. So with a US increase in imports, and exports essentially neutral, it was natural for the trade deficit to go up.
Another factor was the nature of the tariffs the government imposed. The tariffs weren’t limited to finished goods, but also included materials, most famously steel and aluminium, and parts. That meant increased costs for domestic goods would be an offset to the higher costs of imported goods. Also, the tariffs weren’t global, but targeted at China and the EU (and somewhat Canada and Mexico). That meant that overseas buyers could shift their purchases to countries unaffected by the tariff increases. Likewise, the targeted countries imposed counter-tariffs which also raised the cost of exported American goods. Finally, the income from the tariffs, as far as I’m aware, wasn’t directed to programs to boost American production such as research and development, infrastructure improvement, or efficiency measures. Even if some was, those programs would have long-term effects, not short-term.
And while I was double-checking a couple of items in Wikipedia, I can see that several economists did predict higher trade deficits from the tax cuts.
