A key aspect of Donald Trump’s “America First” policy is that a trade deficit represents a “rip off” of the US. The president’s ire is strongest for trading partners, like China and Mexico, that run the biggest surpluses in their trade with the US. “We are going to start whittling that down, and as fast as possible,” Trump said in 2017.
So far, the results haven’t matched the rhetoric. New data out today showed a record-high US trade deficit in goods of $891 billion in 2018, Trump’s first full year in office.
That hefty sum is more than the previous record, in nominal terms, under president George W. Bush in 2006. It’s also a deficit more than $100 billion bigger than the high during Barack Obama’s term, in 2015.
The politically sensitive US trade deficit with China also hit a new high last year, of $419 billion. Trump regularly overstates this number, and cites it as justification for a wide range of tariffs imposed on Chinese imports as part of a tit-for-tat trade war that has sparked global market jitters. The US and China are currently locked in trade negotiations, aiming to boost China’s purchases of US goods and avoid ratcheting up tariffs between the countries even higher.
Last week, research by the London-based Centre for Economic Policy Research concluded that Trump’s trade tariffs had cost American consumers $19.2 billion thus far. (Contrary to how Trump often explains it, the buyers of imported goods pay for the tariffs, not the sellers of exported merchandise.) Even so, tax cuts passed boosted demand for imported goods among US consumers and businesses, while weakening economies abroad pushed up the value of the dollar, making American exports less competitive.
The US runs a big surplus in services, at around $270 billion in 2018. That means the overall US trade balance, which includes both goods and services, came in at $621 billion last year, a 10-year high.