Here is a remarkable and yet entirely unremarkable story. The Commerce Department announced this morning that the country’s trade deficit last year was the biggest in US history. It’s $891 billion for merchandise, $621 billion when the service sector is added in, and $419 billion with China alone. Each is a record. The Post reports that the overall number tops the previous record of $838 billion in 2006, but it doesn’t seem like those numbers are adjusted for inflation or judged relative to the overall size of the economy. So possibly there should be an asterisk after biggest ever. (This Reuters article says biggest since 2008 when adjusted for inflation.) Still however you slice it, for all President Trump’s yakking and fairly disruptive trade wars, the problem has actually gotten worse.
As I said above, it’s remarkable and yet altogether unremarkable. But it’s first important to say that President Trump’s idea that this is like a trillion dollar loss on the part of the US is not right. It’s considerably more complicated than that. And there are good arguments that it’s at least not a problem in the way Trump describes, perhaps not really a problem at all.
But there are other problems that suggest the problems of Trump’s approach and even understanding of the issue. The US economy has been fairly strong. So Americans are buying a lot of stuff. That is a key, maybe the key contributor right there. So to a great extent the ‘problem’ is simply the flip side of a good thing, a fairly strong economy. If you’re buying a lot of stuff, the only way to shift the equation or bring it into balance is to sell a lot more stuff. But the US is already at near full employment. There are limits on how much stuff the economy can even produce: everyone’s already working.
The Post article notes that the deficit with the service sector included actually deteriorated by $100 billion since Obama’s last year in office. That certainly undermines Trump’s claims about his great success. But it seems possible to me that, again, that’s at least in large part an expression of the relative hot economy which Trump understandably brags about constantly.
If nothing else what we can draw from this is that for all the storm and chaos President Trump’s policies have entirely failed to accomplish the goal – or even move toward the goal – they are supposedly aimed to address.