As reported by Bloomberg, US President Donald Trump’s trade war with China comes along with its own self-inflicted injuries, including a steepening trade deficit with China, which is one of Trump’s favourite yardsticks to measure who is ‘winning’ or ‘losing’ in global trade.
The U.S.’s monthly deficit in goods and services with the world reached its highest level in a decade in October while the deficit with China hit a record, according to data on Thursday. The new report showed the deficit grew more than 11 percent through October from the year before and thus pointed to an awkward emerging reality for Trump: If the pattern holds, by the end of this year the U.S. trade deficit will have reached $600 billion for the first time. It also will have grown by more than $100 billion, or a fifth, from when Trump took office in January 2017.
The problem for Trump is that the laws of economics are not bending to his plan. Much of the trade data remains messy. Trump’s tariffs, for example, caused a well-documented scramble earlier this year to import Chinese products ahead of the new import taxes taking effect. But the longer term data is starting to show some trends that could be interpreted as China winning by Trump’s own metrics.
One, by Tariffs Hurt the Heartland, a coalition of business and agricultural groups lobbying against Trump’s new duties, found that imports targeted by U.S. tariffs had continued to grow through September. At the same time U.S. exports of products targeted for retaliation by China, the EU and other American trading partners had been hit hard, with exports declining more than 26 percent through September.
The trade trends are corroborated in other data. The ISM services index, which surveys non-manufacturing companies monthly, showed that imports rose to the highest level since March while exports decelerated by the most since May. Likewise, ISM manufacturing data in recent months has shown a decline in export orders.