U.S. Trade Deficit Highest Since 2008
In January, the American trade deficit was at its highest level since October 2008, according to the Commerce Department.
The trade deficit is the gap between what America exports and what it imports, and it has been rising for the last five months.
Trump blames other nations for subsidizing their industries and dumping those goods on the American market. His solution has been to impose import duties on a wide range of products that the U.S. imports.
Solar panels were hit with a 30% tariff and now he wants to slap tariffs on washing machines, steel and aluminum and many other imports. While the cost of washers won't make a lot of difference, the other tariffs will actually increase the cost of American products, make them even less competitive in the global market and widen the trade gap.
Higher solar panel costs means higher power bills not just for consumers but also for manufacturers.
Higher metal prices means higher raw material costs for American manufacturers.
The EU has threatened tit-for-tat and to impose its own sanctions on imports of iconic U.S. blue jeans, bourbon and Harley-davidson motorcycles.
There are a number of fundamental reasons that U.S. manufacturing is no longer competitive in the global market and imposing tariffs won't address any of them.
However, imposing tariffs may boost the short-term quarterly profits of a few large manufacturers who have paid for a trade policy that favors them. With the corporate tax cuts and a profit bubble, many executives may see a substantial return on their tributes to Trump, for at least the next few quarters, which is about as far as any of them seem to plan for.
The good news for America is that it had a $19.9 billion trade surplus in services such as education and banking. Wall Street still rules and much of the world still believes that a diploma from an American university will ensure a better job at home.