USA trade deficit hits ten-year high
- Author: Sonia Alvarado Mar 08, 2019,
Mar 08, 2019, 0:47
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). Adjusted for inflation, December was the highest imbalance of trade goods in US history.
For years candidate and then President Donald Trump boasted and bragged about what a great deal maker he is, while denigrating, destroying, and tearing up trade deals made by his Republican and Democratic predecessors.
Both have weakened foreign demand for American goods and services.
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 USA economy.
During his recent speech at CPAC, the president said "And now, last year, we had nearly a $500 billion trade deficit with China".
For the full year, exports rose 6.3 per cent to $US2.5 trillion as shipments of goods including crude oil, petroleum products and aircraft engines increased.
"Macroeconomics end up ruling". You can't wish it away.
The Commerce Department report comes amid indications that negotiations with China over a sweeping trade agreement may be in their final weeks. This looks like a smoking gun over tariff tensions with China which may well have cut back its US purchases.
Trump's supporters insist he's tackling that via his trade negotiations with China and other U.S. trading partners.
With the economy at or close to full employment, United States farms and factories have a limited ability to sharply increase output to meet a sudden increase in Chinese orders. "There's a lot going on below the surface here, " he said.
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Nor have the tariffs provided the negotiating leverage that Trump sought. The Commerce Department on Tuesday began investigating whether imports of titanium sponges, used in chemical plants and military hardware, represent a national security threat. It was a response to concerns about Chinese disrespect for intellectual property that Trump had raised when he first imposed import taxes on Chinese goods.
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. Sales overseas increased 6.3 percent to $2.5 trillion a year ago, also the highest level ever.
Meanwhile, US Trade Representative Robert Lighthizer and EU Trade Commissioner Cecilia Malmstrom are meeting on Wednesday in Washington, where the issue of allowing America's agriculture industry access to Europe is expected to be discussed.
Last year, Trump imposed a series of tariffs on Chinese goods in hopes of pressuring Beijing to support more favorable terms for the United States.
Revision estimates for fourth-quarter GDP will be coming down following an unexpectedly deep $59.8 billion trade deficit in December.
However, the central bank said the manufacturing sector cited concerns about the trade tensions, including "weakening global demand, higher costs due to tariffs, and ongoing trade policy uncertainty". If the $US270 billion surplus in services (the element of trade that Trump usually ignores) were included it was, at $US621 billion, still the worst in a decade. As a NY real estate magnate in the 1980s, he routinely complained about Japanese auto companies and investors who purchased iconic American properties like Rockefeller Centre or Pebble Beach.
The tax cuts may also contribute to the jump in trade deficit. "We can turn it all around - and we can turn it around fast", he said. But as trade experts have pointed out, these new rules may be so costly to comply with that they could have the opposite of their intended effect, leading manufacturers to source less rather than more content from North America. He called the trade deficit "unacceptable". The President often boasts about how much money the USA government is reaping from tariffs.
The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose.
"We compute that tradeable real wages fall the most in heavily GOP counties because of the [trade] war", the study found. Americans want to buy things affordably, and with a hot economy, there is money to buy them. We were at the tail end of the Great Recession then, and, because the economy was bad, Americans bought less stuff from overseas.
Trump's tariffs also may cause USA companies to write off sizable investments in their Chinese factories as they scramble to shift operations to safer venues, said the study by Weinstein, Amiti and Redding. So far, Washington has imposed tariffs on almost $250 billion of Chinese imports.
Another is that other countries have levied their own retaliatory tariffs on our own products - most famously, red-state goods such as soybeans and bourbon.