Our view: Despite Trump vows, the trade deficit keeps rising

International trade deficits were the hobgoblins that Donald Trump, as a populist candidate in 2016, said he would bring to heel.

China, Japan, Mexico and others were “stealing our businesses, stealing our jobs, stealing our money,” Trump told throngs in Poughkeepsie, New York. “We can’t continue to allow China to rape our country,” he said to crowds in Fort Wayne, Indiana. “We will end our chronic trade deficits,” he vowed before folks in Portsmouth, New Hampshire.

Trump would achieve this, he said, by getting tough with trade partners and tearing up, or renegotiating, deals such as the North American Free Trade Agreement.

Those steps were taken. And last week the Commerce Department reported that the trade deficit for goods has been increasing, not decreasing, since Trump became president. It reached a record high of $878.7 billion last year, up from $795.7 billion in 2017 and $736.6 billion in 2016.

Detractors say it’s another Trump promise come to nothing, such as Mexico paying for a border wall or “fairly quickly” balancing the federal budget. Defenders say Trump’s trade policies simply haven’t had time to reduce imbalances.

The reality is that trade deficits are not necessarily a bad thing.

A deficit can be an indication of a country’s prosperity. People with more money buy more imported goods, and the U.S. economy is the world’s strongest, fueled during the past year by the twin stimuli of reduced taxes and increased government spending. The strong dollar, meanwhile, makes imports less expensive and U.S. exports more costly.

The greatest evil of China’s trade practices is the uneven playing field faced by American companies operating there, and how they are required to share trade secrets to do business. Fixing that problem — through the ongoing U.S.-China negotiations aimed at ending the tariff trade war — is a worthy and important undertaking.

In the meantime, Trump keeps repeating untrue claims about the tariffs on Chinese imports. As recently as Wednesday, he told reporters that “we are collecting billions and billions of dollars, mostly paid for by China.”

Indeed, those tariffs raised about $12 billion through December, but that’s little more than a rounding error for a U.S. revenue stream of $3.4 trillion this year. And it could be a wash anyway, given that the Trump administration has made $12 billion available to compensate American farmers for Chinese retaliation against U.S. soybeans and other agricultural products.

Moreover, China isn’t paying for Trump’s tariffs. American importers and American consumers are.

In the run-up to his election, Trump exaggerated the evils of trade deficits and said he alone could fix the problem. That’s not happening.