Trump Tax War Propels US Trade Deficit To 10 Year High

Trump Tax War Propels US Trade Deficit To 10 Year High

Trump Tax War Propels US Trade Deficit To 10 Year High

The skyrocketing USA trade deficit past year hit the highest level in a decade, a resounding failure for President Donald Trump's global trade offensive, government data showed Wednesday. The official insisted on anonymity to discuss private conversations.

Washington and Beijing have been locked in intense negotiations to end a months-long trade war. Other Gallup polling earlier in February found that Americans' perceptions of North Korea as the greatest enemy of the USA had plummeted in the past year. "But there is also a strong unanimity that we should have a positive agenda with the U.S".

WATCH: Who holds the power in potential U.S. That increase occurred despite the Trump administration's decision to impose several rounds of new tariffs past year on imported steel, aluminum, and thousands of Chinese-made goods, all with the intention of reducing how much America imports.

But soybean exports, a crucial crop across vast expanses of the country, fell 18 percent for the year to $18.2 billion amid a Chinese boycott sparked by Trump's trade war. In September, it imposed a 10 percent tax on an additional $200 billion of Chinese goods.

"The flaw in how the market thinks is that it's less concerned than it should be about the longer-term outlook for free trade and what it could mean for corporate profitability, and whether the current global trading system is going to work as it has in the future", said Ronald Temple, co-head of multi-asset and head of US equity at Lazard Asset Management.

"We find that the USA tariffs were nearly completely passed through into USA domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters", according to the report. A higher-valued dollar, compared with other nations' currencies, makes the goods that Americans import relatively more affordable and our exports comparatively more expensive overseas. This shortfall also exceeded economists' estimates for a $57.9 billion shortfall.

It will come as somewhat of a disappointment to Trump that despite his actions over (nearly) the past year, the USA trade deficit has widened, not closed.

The gap between what the United States sells and what it buys from other countries rose to 59.8 billion dollars in December from 50.3 billion dollars in November, the Commerce Department said. But there are also secondary effects.

Screenshot JP Morgan

China retaliated, and the simmering trade war roiled financial markets previous year.

Trump's tariffs also may cause United States companies to write off sizable investments in their Chinese factories as they scramble to shift operations to safer venues, said the study by Weinstein, Amiti and Redding.

However, 2018's deficit is higher than the $552.3bn recorded in 2017.

While Mr Trump frequently cites the deficit as evidence of the failure of his predecessors' trade policies - even though most economists don't dwell on the indicator - the gap has increased by $119bn during his two years as president.

China's ceremonial legislature was poised this week to back a law that would discourage officials in the country from pressuring USA companies to hand over technology.

The two sides had been engaged in a spat after Mr Trump removed tariffs on steel and aluminium, but he and European Commission president Jean-Claude Juncker have since settled their differences. Moreover, Trump pulled the US out of the longstanding trilateral North American Free Trade Agreement, which came into force in 1994 to unify the US, Canada, and Mexico. Any far-reaching agreement, he said, would need to include changes in China's policies toward intellectual property protection, forced technology transfer and the subsidization of Chinese companies.

Alarmingly, some analysts now warn Trump will "up the ante" to distract attention from the deteriorating trade situation.

Related news

[an error occurred while processing the directive]