While the farcical Kavanaugh confirmation hearings dominated the news cycle for the past couple of weeks, little mention was made of a disturbing economic headline – the August US trade deficit. Despite all the bluster from the Trump Administration about “winning trade wars” and “trade wars are easy,” America’s trade imbalances for August were the highest ever and its deficit with its most contentious partner – China – reached an all-time high.
Some highlights or low lights for the Trump Administration and the clueless economic nationalists were:
- August imports of industrial supplies and materials ($49.7 billion) were the highest since December 2014 ($51.8 billion).
- August imports of automobile vehicles, parts, and engines ($31.7 billion) were the highest on record.
- August imports of other goods ($9.1 billion) were the highest on record.
- August petroleum imports ($20.5 billion) were the highest since December 2014 ($23.6 billion).*
These numbers will probably mean that the Trump Administration will push for more and stiffer tariffs, although the President is set to meet with Chinese President Xi Jinping next month. Yet, if anything comes out of the meeting, it will have little impact on US trade imbalances or the economy overall.
President Trump does not have to meet with the Chinese President or, for that matter, any other head of state, for the cause of US trade problems emanate right where he currently resides – Washington, D.C. The US trade deficit is the culmination of years of ruinous Congressional and Presidential polices of high taxes, onerous regulations, and deficit spending which have gutted the nation’s manufacturing base. The US simply does not produce goods like it used to and has been kept afloat by its status as the world’s reserve currency. “King Dollar” has allowed America to consume without having to produce.
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