Despite Trump’s best efforts to limit imports through his America First policies – especially imports from China – this past December the US trade deficit hit a decade high. In an end of year report from the Commerce Department, the U.S. was found to have posted a merchandise trade deficit greater than $891 billion last year – the LARGEST in the history of this nation.
Meanwhile, the trade deficit with China reached an all time high of $419 billion, even with the Trump tariffs targeting Chinese goods in hopes of decreasing the United States’ reliance on them. The goods and services deficit saw a 19% hike in just the last two months of the year, to $59.9 billion and the highest monthly trade deficit in a decade.
Trump’s America First policies have been implemented with the intention to close the trade gap but this data shows that those policies haven’t exactly been that successful. Americans are still importing way more from abroad than they are exporting, and that gap is widening all the time. For instance, this recent report shows that imports increased 7.5% while exports saw only a 6.3% growth.
Also, Trump’s $1.5 trillion tax plan which dropped in 2017 actually just pushed the deficit higher because the government had to borrow money to pay for it, and some of that money, yes, came from foreign investors. Moreover, the Federal Reserve had four separate interest rate hikes last year to counter fears of an overheating economy. This chain of events increased the strength of the dollar and only served to rev up purchases of relatively inexpensive foreign goods.
For three back-to-back years, trade deficits have increased and continue to top themselves. Even if this is a concern for President Trump and his administration, many leading economists do not agree with his bold emphasis on lowering the trade deficit. Some actually suggest that deficits are not a direct reflection or indication of trade relationships, but instead reflect a variety of economic forces.