Another Broken Promise - 2018 Trade Deficit At Record Level

Donald Trump promised to lower the trade deficit between the U.S. and other countries, saying it showed that those countries were taking advantage of the United States. To do that, he instituted a series of tariffs on imported goods.

Those tariffs are bringing in 91% more revenue than at this time last year. Trump would like us to think this is money other countries are paying the U.S., but that is not true. What the tariffs really amount to is a new tax on American consumers.

But have the tariffs lowered the trade deficit (their purpose according to Trump)? NO! The trade deficit has risen for the last two years -- and in 2018 was at the highest level in United States history!

Here's part of how The Washington Post reported it:

The Commerce Department said Wednesday that — despite more than two years of President Trump’s “America First” policies — the United States last year posted a $891.2 billion merchandise trade deficit, the largest in the nation’s 243-year history.

The trade gap with China also hit a record $419 billion, underscoring the stakes for the president’s bid to reach a deal with Chinese President Xi Jinping as soon as this month.

The department’s final 2018 trade report, which was delayed by the partial government shutdown, showed that the United States bought far more in foreign goods than it sold to customers in Africa, Asia, Europe and North America. The shortfall topped the 2006 record of $838.3 billion, set as the housing bubble was peaking, and marked the third consecutive year of rising deficits. . . .

It has been evident for months that Trump was not shrinking a trade gap that he calls “unsustainable” and that he says represents a major transfer of wealth from Americans to foreigners. Over the past year, even as he imposed tariffs on foreign-made solar panels, washing machines, steel, aluminum and assorted goods from China, imports roared ahead of exports.

The president thus begins his reelection drive with a core campaign promise unfulfilled — and with a recent flurry of economic research showing that his embrace of tariffs is damaging the U.S. economy.

Economists say the trade deficit is swelling because of broad economic forces, including a chronic shortfall in national savings that was exacerbated by last year’s $1.5 trillion corporate and personal income tax cut. As cash-flush businesses and consumers increased their spending, purchases of imported goods rose while the overvalued dollar weighed on exports.

“Macroeconomics end up ruling. You can’t wish it away. You can’t tariff it away,” said William Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies.