Trump dealt blow as USA trade deficit jumps

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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).

Economists broadly agree that the trade deficit isn't a particularly accurate indicator of economic health - and, in fact, many have argued that the deficit climbed in part a year ago because the USA performed so admirably in the face of global economic malaise. As I noted yesterday, a new study on the economic costs of the tariffs shows they they are costing $1.4 billion every month-that's above and beyond the direct costs created by the tariffs, which have transferred more than $12 billion from American consumers to the U.S. Treasury in the form of higher taxes. President Donald Trump has said that one of the main reasons he had put steep tariffs in place was to combat the trade deficit.

As cash-flush businesses and consumers increased their spending, purchases of imported goods rose while the overvalued dollar weighed on exports. You can't wish it away. Which could mean a boost to auto and auto-parts imports, which would contribute to. you guessed it. a wider trade deficit.

"We do have concerns about certain aspects of the trade policy pursued by the current USA administration", Malmstrom said in a statement last week before the meeting, according to CNBC. The previous trade deficit recrod, of $838.3 billion, was in 2006, under President George W. Bush, as the housing bubble peaked.

While that reserve currency status does handicap the competitiveness of U.S. exports, it lowers borrowing costs for United States borrowers and enables Americans to enjoy a higher standard of living than they would if there were no trade deficits. He called the trade deficit "unacceptable". The real petroleum gap shrank to US$141.7 billion as exports increased.

'That will take time and if the Chinese growth is as soft as most economists believe, it is hard to see how they can ramp up demand for US products very much this year, ' said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Trump's supporters point to his talks with China and other U.S. trading partners along with the renegotiation of Nafta as efforts that will help reduce the USA trade deficit.

President Trump came into office saying America was getting the bad end of deals around the world. "We can turn it all around - and we can turn it around fast", he said.

US and Chinese officials have hinted that some kind of agreement could be finalized by the end of March, with Trump and President Xi Jinping possibly meeting to formalize the deal at Trump's private club in Mar-a-Lago, Florida. 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. We were at the tail end of the Great Recession then, and, because the economy was bad, Americans bought less stuff from overseas. "Would we like that if other countries all of a sudden just unilaterally put major tariffs on us?"

The tariffs may have failed their primary policy aims, but they have had other consequences-mostly negative ones.

"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.

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