Trade

The Trade Deficit Reaches Another Record High

Written by SK Ashby

While our overall trade deficit with the rest of the world reached a 10-year high in 2018, our trade deficit with China reached an all-time record high of nearly $420 billion according to the Commerce Department.

Moreover, December marked the highest trade deficit in a single month in history.

From the Associated Press:

WASHINGTON (AP) — The U.S. trade deficit jumped nearly 19 percent in December, pushing the trade imbalance for all of 2018 to widen to a decade-long high of $621 billion. The gap with China on goods widened to an all-time record of $419.2 billion. [...]

The gap between what the United States sells and what it buys from other countries rose to $59.8 billion in December from $50.3 billion in November, the Commerce Department said. Adjusted for inflation, December was the highest imbalance on trade goods in U.S. history.

This isn't happening just because Trump launched a trade war that has wiped billions in American exports off the table, but that is certainly a contributing factor.

The fact is even if Trump signs a trade deal of some description with Chinese President Xi Jinping, and even if their so-called "deal" includes a promise to purchase more American goods, our trade deficit with China will remain very high even if it inches slightly lower than it is today.

Our trade deficit will remain high as long as our economy is relatively healthy; as long as Americans still have money and an appetite to buy more shit. The deficit is driven by American consumption and demand for cheap goods and it will only dip if Americans lose a significant amount of purchasing power.

We have a consumer-driven economy and China has an export-driven economy. Nothing that Trump or any future president does is going to change that. Any Democratic candidate who even vaguely implies that they will perpetuate Trump's trade war will lose my vote during the primary season.