The trade deficit has exploded under the stable genius
by digby
President Trump’s 2016 campaign didn’t include very many solid predictions of what he might accomplish, but a few nonetheless stand out. Trump insisted he would punish foreign countries that he said were taking advantage of the United States economically and bring manufacturing back to America’s shores. He isolated Mexico and China as particularly bad actors in this light.
We learned on Wednesday morning that, in broad strokes, Trump’s effort has been unsuccessful: The trade deficit has climbed during his presidency.
But it’s worse for Trump’s rhetoric than it appears.
Overall, the deficit hit $621 billion, the widest since 2008. But that was boosted by a net surplus in trade of services, which helps pull the overall trade balance — which is a combination of both services and manufactured goods — upward.
If we consider goods alone — precisely the deficit that Trump pledged would shrink — we see that it has hit its widest margin in decades.
Since the data provided by the Commerce Department only goes back to 1992, this graph obscures the truth: It’s the highest in American history.
See that spike in goods at the end of the graph? That was a drop in the trade deficit in manufactured goods that occurred in November. (Since it was a “drop” in the deficit, which moves downward, the line on the graph moves upward.) Trump even bragged about this change, crediting it to tariffs his administration had imposed. We noted last week that this argument was incorrect. We learned on Wednesday that it was also short-lived.
If we similarly look at the change in the trade balance for various countries since the first quarter of Trump’s presidency, we see how his administration compares to his campaign. In some places, the trade balance has improved (green circles), with the surplus growing or the deficit decreasing. In many, it’s gotten worse — including, dramatically, in Mexico and China.
In fact, the most recent quarterly data by country shows that the manufactured goods deficits with Mexico and China are at their widest points since 1999. In the third quarter of 2018, the goods balance with China was a deficit of $106 billion. With Mexico it was about $24 billion.
The problem here isn’t really with Trump’s administration. The president can have some effect on international trade, but most of it is driven by the massive American economy: Who buys what, from where. The problem was really that Trump made campaign trail promises that he would always have had a challenge in fulfilling.
Not exactly. Trump doesn’t understand how global trade works or what the very real problems are. He thinks it’s some kind of zero-sum game where the president “wins” by “making big deals” that disadvantage foreign competition. He’s very stupid. But we knew that.
His cult understood him to mean that he would bring back all the heave manufacturing jobs to the US that existed in the good old days. He hasn’t accomplished that either.
It was always gibberish. His “trade policy” is really just another expression of his extreme xenophobia. The bad foreigners are “taking advantage” and he’s going to put them in their place. That’s all he knows.
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