Our overall trade deficit reached a five-month high and our trade deficit with China specifically reached a record high during the month of July according to new data from the Commerce Department.
The trade deficit increased slightly less than economists predicted, but it was still enough to reach a new record.
From Reuters:
The Commerce Department said the trade deficit increased 9.5 percent to $50.1 billion as exports of soybeans and civilian aircraft dropped and imports hit a record high. The trade gap has now widened for two straight months.
Economists polled by Reuters had forecast the trade shortfall swelling to $50.3 billion in July.
I'm starting to feel like a broken record for saying this, but Trump's trade war isn't going to change this. If anything, his trade war may accelerate our growing trade deficit.
Americans are still buying lots of foreign shit, but foreigners are buying less of our shit. This is spelled out in the Commerce Department report showing a sharp decline in American exports such as soybeans which China has stopped buying altogether.
Even if Trump's policies and trade war eventually lead to an economic downturn, the amount of foreign goods that we buy may decrease but it won't alter the way our economy is organized around a large service sector that relies on foreign imports for business.
We will always have a trade deficit, and that's fine. I mean, hypothetically speaking, if Trump cut off all imports tomorrow it would lead to hyperinflation and you would find empty store shelves everywhere. Most of the economy would shut down.
When Trump sees this news, his takeaway will probably be that he should impose more tariffs as soon as possible.