Trump pledge undermined as U.S. trade deficit widens

Trump pledge undermined as U.S. trade deficit widens

This comes despite President Trump's "America First" policies aimed at shrinking the trade gap and increasing American exports.

The United States' goods and services deficit widened by $68.8 billion to $621.0 billion in 2018. That's the highest overall deficit in a decade.

An acceleration in economic growth previous year from Mr Trump's debt-funded tax cuts helped to boost the appetite for foreign goods.

"In particular, economic weakness in China and Europe and trade-related uncertainties are dampening trade volumes". They also point to his renegotiation of Nafta as something that will help reduce the USA trade deficit in the long run.

Trump's fixation on stock-market performance has shaped his assessments of his economic policies.

Backstory. On Feb. 24, President Trump postponed a set of additional $200 billion in tariffs on Chinese goods that were set to go into effect on March 1, saying that the USA and China were making progress in trade talks. They reflect broader trends in the economy, including savings and investment rates.

US President Donald Trump, the self-proclaimed Tariff Man, is set to become the $100 Billion Man.

The dollar is now valued 19 per cent above its 10-year average against the currencies of major USA trading partners, according to Federal Reserve data.

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The relative strength of the USA economy means that it consumes more and imports more goods even as consumers and companies in China and Europe and the economies exposed to them consume less and import less.

Simultaneously, other countries - including China and members of the European Union - have not been doing so hot.

Following the same trend as with China, US export growth to the EU was eclipsed by imports of European goods and services to America, which past year rose to $487.9bn. To meet his pledges, Trump abandoned the 12-nation trade pact known as the Trans-Pacific Partnership (TPP) as soon as he took office.

"The costs of the trade war are quite large relative to optimistic estimates of any gains that are likely to be achieved", wrote the trio of economists. Derek Scissors, resident scholar at American Enterprise Institute calculates the tax cuts could boost the trade deficit by $200 billion. These actions and threats have led to some predictable consequences.

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

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.

"Billions of dollars, right now, are pouring into our Treasury", he told the Conservative Political Action Conference, adding that Chinese exporters are absorbing nearly the entire burden of the tariffs. 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.

On an annual basis, the trade gap reached the largest total since 2008, when it was $708.7 billion.

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