Jonathan Ernst/Reuters
- The US trade deficit in goods and services hit $621 billion in 2018, an increase of $69 billion from the year before.
- The increase was driven by a $218 billion increase in imports and a smaller $149 billion increase in exports.
- President Donald Trump has made the reduction of the trade deficit a key goal of the trade war, despite most economists arguing that the measure is not a reflection of the US’s actual economic competitiveness.
The US trade deficit in goods and services increased to $621 billion in 2018, an increase of $69 billion from the year prior and the largest deficit since 2008.
While most economists dismiss the trade deficit as a measure of the US economy’s strength, President Donald Trump has made the reduction of the trade deficit a key benchmark for his year-long trade war.
But despite the president’s tariffs on steel, aluminum, and Chinese goods, strong US demand for imports and a strong dollar drove the deficit up to its highest level since 2008.
According to the Census Bureau, imports to the US increased to $218 billion in 2018, to $3.12 trillion, while exports grew just $149 billion, to $2.5 trillion.
Looking just at goods — a figure that Trump also focuses on — the trade deficit increase by $83.8 billion $891 billion, a 10.4% jump from 2017. By contrast, the US actually maintained a $270 billion surplus in the trade of services, up $15 billion or 5.9% from 2017.
Additionally, the deficit with the main target of Trump’s trade war — China — also grew substantially in 2018. The goods trade deficit with China hit $419 billion last year, an increase of $44 billion, according to Census Bureau data. Meanwhile, imports increased $34 billion, to $540 billion, while exports dropped $10 billion, to $120 billion.
While Trump’s goal for the trade war was to reduce the trade deficit, particular in goods, Trump’s tariffs may actually be helping to drive the deficit increase.
US companies rushed to bring in goods that were about to be subject to Trump’s tariffs, driving up imports, while at the same time counter-tariffs by other countries like China and Mexico led to a significant decrease in some major US exports.
In total, the trade deficit has increase by $119 billion in the two years since Trump took office, as the deficit came in at $502 billion in 2016.
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See Also:
- The Senate is poised to reject Trump’s national emergency declaration, but the White House has promised to veto
- Fox News CEO Roger Ailes tipped off Trump about a 2016 debate question, report claims — the same thing he attacked Hillary Clinton and CNN for
- Fox News reportedly killed its story on Trump’s alleged affair with Stormy Daniels weeks before the election
SEE ALSO: The US federal deficit soared to $310 billion to start fiscal year 2019, up 77% from the year before
Source: Business Insider – bbryan@businessinsider.com (Bob Bryan)