- President Donald Trump has made the reduction of the US trade deficit one of the key measures of success in his trade fights with China, the European Union, and Canada.
- According to new data, the US trade deficit is growing despite Trump’s tariffs.
- The deficits between the US and Trump’s main trade adversaries are also growing.
Originally published : By. Bob Bryan
President Donald Trump is losing his trade wars — at least according to his favorite measure of success.
The president repeatedly mentions the US trade deficit when talking about trade fights with China, the European Union, and Canada. In negotiations with China, Trump’s major request was a massive reduction in the bilateral trade deficit.
But based on the latest trade numbers, released Friday, it appears Trump is falling short of his main goal for trade battles; the US trade deficit is actually heading in the opposite direction.
The US trade deficit increased in June, to $46.3 billion from $43.2 billion in May, according to the US Census Bureau. Additionally, the trade deficit for 2018 continues to outpace the shortfall in 2017.
“Year-to-date, the goods and services deficit increased $19.6 billion, or 7.2%, from the same period in 2017,” the Census Bureau said in a press release.
Many economists say that Trump’s focus on trade deficits is misguided and that large trade deficits simply show increased domestic demand. In fact, some argue that a larger trade deficit actually displays signs of a stronger US economy.
But the data could serve to further escalate Trump’s desire for a more aggressive trade policy:
- Canada’s global trade deficit, for instance, shrank to $481 million in June, down from $2.1 billion the month before, according to Statistics Canada. The decrease came on the back of strong export growth, which was up 4.1% from the month before.
- According to the US Census Bureau, the US goods trade deficit with Canada jumped to just over $2 billion in June from $1.5 billion in May.
- The goods trade deficit with the EU did shrink in June, to $11.7 billion from $13.4 billion the month before.
- But the deficit over the first six months of 2018 increased compared with 2017, to $77.6 billion from $69.9 billion.
Trump other major trade adversary, China, also appears to be winning the trade fight based on the president’s metrics:
- The goods trade deficit with China increased in June by about $300 million from the month before — and by almost $1 billion from June 2017.
- Through the first six months of 2018, the goods trade deficit with China hit $185.7 billion, up from $171.1 billion in the first six months of 2017.
China is preparing a counterattack to Trump’s latest tariff threat as the trade war continues to escalate
- China on Friday threatened to impose tariffs on $60 billion worth of US goods.
- The move is in response to threats by the Trump administration to raise the tariff rate on an additional $200 billion worth of Chinese goods.
- The two countries have already imposed about $34 billion worth of tariffs on each other.
China on Friday said it would impose retaliatory tariffs on about $60 billion worth of US goods if the Trump administration continued to escalate a trade war between the two countries.
The tariffs would be imposed at four different tax rates, China’s Ministry of Commerce said in a statement.
“The implementation date of the taxation measures will be subject to the actions of the US, and China reserves the right to continue to introduce other countermeasures,” the statement said.
The move is a response to the Trump administration’s recent threat to raise the proposed tariff rate on an additional $200 billion worth of Chinese goods to 25% from 10%. That threat is part of efforts to make it more painful for China “to continue their bad practices than it is to reform,” US Commerce Secretary Wilbur Ross said Thursday on Fox Business Network.
The Trump administration last month enacted a 25% tariff on roughly $34 billion worth of Chinese goods, prompting Beijing to retaliate in kind, and then threatened to slap additional duties on nearly all Chinese goods sent to the US. US tariffs on another $16 billion worth of Chinese imports are set to be enacted at a later date.
Here’s a timeline of the US-China trade war so far:
- March 1: President Donald Trump announces tariffs on all imports of steel and aluminum, including metals from China.
- March 22: Trump announces plans to hit $50 billion worth of Chinese goods with a 25% tariff. China announces tariffs in retaliation to the steel and aluminum duties and promises a response to the latest US announcement.
- April 3: The US trade representative announces a list of Chinese goods subject to the tariffs. There is a mandatory 60-day comment period for industries to ask for exemptions from the tariffs.
- April 4: China rolls out a list of more than 100 US goods worth roughly $50 billion that are subject to retaliatory tariffs.
- May 19: After a meeting, the two countries announce the outline of a trade deal to avoid the tariffs.
- May 29: The White House announces that the tariffs on $50 billion of Chinese goods will move forward, with the final list of goods released June 15. The move appears to wreck the nascent trade deal.
- June 15: Trump rolls out the final list of goods subject to new tariffs. Chinese imports worth $34 billion would be subject to the new 25% tariff as of July 6, with another $16 billion worth of imports subject to the tariff at a later date. China retaliates with an equivalent set of tariffs.
- June 18: Trump threatens a 10% tariff on another $200 billion worth of Chinese goods.
- July 6: The first tranche of tariffs on $34 billion worth of Chinese goods takes effect; China responds in kind.
- July 10: The US releases an initial list of an additional $200 billion worth of Chinese goods that could be subject to a 10% tariff.
- August 1: Washington more than doubles the value of its tariff threats against Beijing, announcing plans to increase the size of proposed duties on $200 billion worth of Chinese goods to 25% from 10%.
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