The trade deficit with China continues to weaken America and strengthen our rival. For all the ruckus it created, the trade war failed to bring down the trade deficit. Even while unusual circumstances continue to cloud the picture it appears that America’s trade picture is in worse shape today than when it started. This is evidenced by the number of container ships from Asia lined up at American ports. The trade talks started in early 2017 and have dragged on with promises of a deal always around the corner. Looking back, we were told, they were always moving forward or nearing completion but such announcements generally proved premature.Today, the trade deficit is growing and is bigger than ever. Those familiar with China and how it negotiates knew the Chinese would never agree to, or more importantly, honor any deal not strongly tilted in their favor. The events that unfolded and overshadowed the trade talks not only surrounded Covid-19 but more importantly how governments and central banks reacted to the pandemic. Here in America, a tsunami of freshly printed money was unleashed upon the masses creating the oddest recession in history. To be blunt, Americans saw their incomes soar while locked away in their homes and unable to attend work.
This of course resulted in consumers buying goods, many of them imported from China, rather than doing the right thing and paying obligations such as rent or mortgage payments. In fact, our government with little thought to the long-term ramifications, added fuel to this buying binge when it rapidly imposed a moratorium on evictions and foreclosures. This means we should expect the controversy over just how much trade contributes to America’s economic growth to again rise as growth slows…
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