Trade Deficit Widens Despite Tariffs: Record Deficits With China, Mexico

Today's trade report will set off hows from trump. Imports up, exports down. Record deficits with China and Mexico.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $53.2 billion in August, up $3.2 billion from $50.0 billion in July, revised.

Exports, Imports, and Balance

  • August exports were $209.4 billion, $1.7 billion less than July exports.
  • August imports were $262.7 billion, $1.5 billion more than July imports.
  • The August increase in the goods and services deficit reflected an increase in the goods deficit of $3.6 billion to $76.7 billion and an increase in the services surplus of $0.4 billion to $23.5 billion.
  • Year-to-date, the goods and services deficit increased $31.0 billion, or 8.6 percent, from the same period in 2017.
  • Exports increased $129.6 billion or 8.4 percent. Imports increased $160.6 billion or 8.4 percent.

Exports

  • Exports of goods decreased $1.9 billion to $138.9 billion in August.
  • Industrial supplies and materials decreased $2.4 billion.
  • Soybeans decreased $1.0 billion.
  • Consumer goods increased $1.6 billion
  • Exports of services increased $0.2 billion to $70.5 billion in August.

Imports

  • Imports of goods increased $1.7 billion to $215.6 billion in August.
  • Automotive vehicles, parts, and engines increased $1.0 billion.
  • Cell phones and other household goods increased $0.9 billion.

Balance of Trade by Nation

China Canada Mexico Two-Quarter Total

  • China: -178.785 Billion
  • Mexico: -35.779 Billion
  • Canada: +3.290 Billion

Through two quarters, the balance of trade with China and mexico are on a record negative pace. The US has a small surplus with Canada.

Headwinds for Trump

  • The rising US dollar makes goods exports from the US more expensive and imports cheaper.
  • Tariffs and rate hikes by the Fed both act to strengthen the dollar.
  • The global economy is weaker than the US economy. This serves to boost imports and reduce exports.

Trump is fighting a counterproductive battle that he does not even understand.

China retaliatory tariffs on US soybeans target the US farm belt in a battle highly likely to hurt Republicans in the mid-term elections.

Trump's ballyhooed deal with Mexico and Canada was nothing more than hot air that accomplished nothing.

Related Articles

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  2. Art of the Deal: Trump Administration Praises “Paradigm-Shifting" Model
  3. Agricultural Exports Plunge, Trump Accuses China of Meddling in US Elections

Mike "Mish" Shedlock

Comments
No. 1-6
Realist
Realist

Trump may eventually succeed in running a trade surplus with China. If China can keep developing industries that require high skilled workers and Trump keeps protecting low skilled workers, then low-income Americans will be able to sell to high-income Chinese. Be careful what you wish for.

JonSellers
JonSellers

Trump doesn't understand that the trade deficit has nothing to do with China. He is not fighting the Chinese. He's fighting American corporate leaders. Put a tariff on China and they'll just move production somewhere else that isn't America. That has no actual effect on the trade deficit or American jobs.

But its good politics. His voters don't understand either and he gets off as a tough guy protecting working class white folk.

Escierto
Escierto

Every time Trump opens his mouth on tariffs the USD goes up. Combined with interest rate increases the strength of the USD is decimating US exporters and making imports even cheaper for US consumers to buy. The guy is clueless and he doesn't listen to anyone who has actual knowledge about how these things work. But the cult followers of the Great Leader, Kim Il Trump, eat it up.

shamrock
shamrock

You always say Trump will howl about the trade deficits rising under his watch but he never does. He just ignores it. He will be tweeting about the drop in the unemployment rate, that is for sure.

Carl_R
Carl_R

Given the tax cut and the strong economy, consumers are spending, as you would expect. Most consumer goods are made overseas.

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