Donald Trump made many promises in 2016 about how he would fix the economy, including a promise to shrink the trade deficit. But according to a new Department of Commerce report, Trump’s ill-advised economic policies and trade wars have caused the trade deficit to reach a 14-year high.
And still, he claims America is “leading the World in Economic Recovery.”
…also coming back in record numbers. We are leading the World in Economic Recovery, and THE BEST IS YET TO COME!
— Donald J. Trump (@realDonaldTrump) October 6, 2020
Earlier this week, I reminded my readers and listeners that Trump’s claim of creating the “greatest economy in the history of America” has been one of the most overused talking points throughout his presidency, and that his trade war and economic policies have been bad for business and labor.
I documented how Trump and the GOP have worked in tandem to promote the trade war and single-handedly create economic conditions that all but guaranteed a recession long before coronavirus arrived on the scene — conditions that did make the so-called pandemic worse, however.
The “tariffaxes” (tariffs are taxes — H/T Shannon Joy) Trump imposed on our trading partners along with his domestic economic policies have been hitting the pocketbooks of American consumers to the tune of $1.4 billion a month since the end of 2018. And despite signs of a slowing economy near the end of 2019, Trump doubled down on his trade war.
A National Bureau of Economic Research paper released in January 2020 showed how Trump’s claim that China and other nations were paying the tariffs he levied on thousands of products since his trade war began was a lie. According to the report, approximately 100 percent of the costs fell directly on American firms and consumers.
Trump often brags about how his tax cuts and economic policies have created new jobs at “historic” levels — even though Obama had better numbers — but according to data released by the Labor Department in August 2019, those claims are rhetorical hot air.
The report showed that American employers had created 500,000 fewer jobs from January 2018 through March 2019 than initially estimated. Hiring averaged around 180,000 jobs per month, down from the 223,000 jobs initially estimated. When compared to 2017’s job creation average of 179,000 jobs per month, 2018 was essentially flat.
Another Labor Department report released last week showed us how the job picture is getting worse in the coronavirus recession.
2.4 million people have been out of work for 27 weeks or more — the threshold it uses to define long-term joblessness — and an even bigger surge is on the way as nearly five million people are approaching long-term joblessness over the next two months. The report also showed that even as temporary layoffs were on the decline; permanent job losses are rising sharply.
These two problems — rising long-term unemployment and permanent job losses — could foreshadow a period of long-term economic damage and financial pain for American families when taken together.
On the trade front, Trump’s trade war has been equally disastrous for U.S. businesses and consumers. The International Business Times recently reported that Trump’s economic policies in the trade area have failed BIGLY when it comes to reducing the trade deficit. (emphasis mine)
The U.S. trade deficit expanded in August to a 14-year record, a blow to Donald Trump who had made reducing the debt a central goal of his administration. Data from the Department of Commerce indicates that the trade deficit had grown by almost 6% to $67.1 billion.
The figures outpaced expert projections of $1 billion less growth, according to Reuters. The trade deficit represents the amount by which imports outpaced exports, and can indicate an economy moving away from production. Overall, the U.S. imported $239 billion, a 3.2% increase, and exported $171.9 billion, a 2.2% increase.
The deficit with China decreased by 7%, from $28.3 billion to $26.4 billion. Decreasing the overall trade deficit was a focus of the Trump administration, but China in particular was targeted with an expansive suite of tariffs in 2018 and 2019.
The trade war caused harm on both sides of the Pacific and an overall transfer of activity away from U.S. and Chinese markets, but U.S. companies got hit worse. A September 2019 study from Moody’s Analytics placed the damage to the U.S. economy at 300,000 jobs and 0.3% gross domestic product. Other studies estimated that GDP losses could be double that.
Trump has stated in the past that “trade deficits hurt the economy very badly,” and he attacked the issue by attempting to reduce the U.S. trade deficit using his trade war with China even though it’s not clear that they are a negative indicator for a complex, national economy. He has recently backed away from this strategy.
Trump was elected, in part, due to his track record of so-called business success, even though he’s had more business failures than successes — including four bankruptcies — while achieving the self-proclaimed status of “the king of debt.”
Desperate to salvage his crumbling reelection prospects, Trump has continued to crow about the successes of his trade war, the awesome economy he has built, and the millions of jobs he’s created. Unfortunately for Trump, his claims are diametrically opposed to the reality being lived by the voters he needs to win.
In other words, Trump’s trade war has turned out just as predicted.
And now we can add reducing the trade deficit — along with paying off the national debt in eight years — to the list of failures and/or broken promises his economic policies have wrought. .
David Leach is the owner of the Strident Conservative. He holds people of every political stripe accountable for their failure to uphold conservative values, and he promotes those values instead of political parties.