Sun Sentinel Palm Beach Edition
U.S. trade deficits balloon under Trump
President talking less on his fixation of Chinese imports
WASHINGTON — President Donald Trump built his trade policy on an obsession with cutting fat U.S. deficits with China, Mexico, Europe and others.
But for weeks, Trump has barely mentioned that once-singular economic focus.
He has written no Twitter posts about trade deficits since July. And the subject was conspicuously missing from his statement Monday announcing new tariffs on $200 billion worth of Chinese imports.
The reason is that U.S. trade deficits have soared since he took office, driven up by strong consumer spending but also by the blizzard of tariffs he unleashed to lower deficits.
Eager to avoid anticipated higher prices, American businesses have responded to tariffs by increasing imports from China and elsewhere.
The overall U.S. trade deficit rose 10 percent last year to $552 billion, after being flat the previous two years. The deficit rose 7 percent more this year through July.
“There’s no good answer for him; that’s why he’s not talking about it,” said Derek Scissors, an economist at the conservative American Enterprise Institute, referring to the large and growing negative U.S. trade deficit.
Trump addressed the deficit at a news conference Tuesday.
“I watch trade deficits because to me, deficits are very important,” Trump said. But then he added a rare note of skepticism about deficits. “They’re not everything, and they’re not exact,” he said. “Sometimes you can have ... a deficit and that’s not such a bad thing.”
And at least in the short term, deficits are likely to keep growing.
Stronger economic growth, boosted in part by tax cuts, has given people more money to buy imported products, and American companies will keep trying to hedge against more and higher tariffs to come.
“Everybody in their right mind is thinking about how they can get products to the U.S. and store them,” said Matt Priest, president of the Footwear Distributors and Retailers of America.
Shoes were excluded from the administration’s list of about 6,000 Chinese-made goods that beginning Monday will be subject to 10 percent tariffs, rising to 25 percent in January. But Trump has threatened to impose duties on more Chinese goods worth $267 billion.
If that happens, footwear and virtually every other product from China will be hit with tariffs because annual imports from China total about $505 billion.
China this week responded by announcing tariffs on $60 billion in U.S. imports.
The U.S. trade deficit with China surged to $376 billion last year and is running 9 percent higher through July.
Trump has been railing about America’s trade deficit back to the 1980s when Japan was America’s biggest trade problem, not China. Some economists see the U.S. deficit as a symptom of U.S. industrial weakness, but even they would take issue with how Trump has presented the trade balance as a kind of win or loss figure.
Trump’s fixation with the deficit also seems to have confused and steered earlier negotiations with China and other parties.
In a previous round of talks, Beijing thought it had a deal that would satisfy Trump’s desire to cut the deficit as it offered to buy a lot more U.S. soybeans, liquid gas and other American products, only to have Trump later reject it.
With Trump more recently having toned down his fiery rhetoric about big trade deficits, it may have become easier for administration officials to convey a clearer message to Beijing about what the U.S. wants from China: Real reforms that would address systemic problems involving protection of intellectual property, market access for American companies, and other state-controlled mercantilist policies, in compliance with Beijing’s World Trade Organization commitments.