Trump's Trade Deficit is the Highest in a Decade


The United States trade deficit reached its highest since 2008 and has increased 12.4 percent since last year. The trade deficit hit the 621.036 million level despite the protectionist measures that Donald Trump´s government has been aggressively promoting. Since Trump arrived in Washington the deficit has grown by 119.035 million dollars.

The trade gap widened despite U.S. exports growth, which went up 5.9 percent in 2018. On the other hand, imports expanded by $3.12 billion, a rise of 7.6 percent.

Notwithstanding the trade feud, the deficit with China expanded last year, rising 11.6 percent. U.S. exports to the Asian economic power dropped 7.3 percent while the imports of Chinese goods rose 6.2 percent. Ironically, the strong state of the U.S. economy was a major cause of the widening trade deficit, as Trump's fiscal policy boosted the economy and thus boosted consumption.

With the European Union, the trade deficit ended up at 169.269 million dollars, growing 11.8 percent since 2017, as the imports and the exports rose 12.2 percent and 11.8 percent respectively.

The U.S. has dramatically changed its international trade policy stance since Donald Trump became the president in 2016, with the aim of closing the trade gap and boosting the economic growth. Their strategy consists of imposing tariffs in order to make their trade partners change their policy. For example, the U.S. imposed tariffs over 250 billion worth of Chinese imports with the purpose of making the Asian country change its policy concerning non-trade barriers like subsidies and intellectual property issues, such as forced technology transfers.

However, the data is showing that despite this policy the opposite is happening, mostly boosted by a slowing global economy and growing domestic consumption.

Nevertheless, the trade talks with China seem to be progressing, and while there is a chance a "very good deal" will come out of those meetings, there are still concerns about enforcing it.

“They’re moving along well and we’ll see what happens,” said Trump on his Twitter account this Wednesday concerning the talks. Whether or not the deal will help reduce the trade deficit remains to be seen.

Sara Patterson has a Master’s Degree in political science and enjoys analyzing both current events and the international markets to get a fuller perspective of the currency market. Before turning to financial writing, she taught English writing skills to high-school age students. Sara’s work has been published on various financial and Forex blogs.