Trump is losing the trade war, according to his favourite measure
- President Donald Trump has made the reduction of the US trade deficit one of the key measures of success in his trade fights with China, the European Union, and Canada.
- According to new data, the US trade deficit is growing despite Trump's tariffs.
- The deficits between the US and Trump's main trade adversaries are also growing.
President Donald Trump is losing his trade wars — at least according to his favourite measure of success.
The president repeatedly mentions the US trade deficit when talking about trade fights with China, the European Union, and Canada. In negotiations with China, Trump's major request was a massive reduction in the bilateral trade deficit.
But based on the latest trade numbers, released Friday, it appears Trump is falling short of his main goal for trade battles; the US trade deficit is actually heading in the opposite direction.
The US trade deficit increased in June, to $46.3 billion (R615 billion) from $43.2 billion in May, according to the US Census Bureau. Additionally, the trade deficit for 2018 continues to outpace the shortfall in 2017.
"Year-to-date, the goods and services deficit increased $19.6 billion (R260 billion) , or 7.2%, from the same period in 2017," the Census Bureau said in a press release.
Many economists say that Trump's focus on trade deficits is misguided and that large trade deficits simply show increased domestic demand. In fact, some argue that a larger trade deficit actually displays signs of a stronger US economy.
But the data could serve to further escalate Trump's desire for a more aggressive trade policy:
- Canada's global trade deficit, for instance, shrank to $481 million in June, down from $2.1 billion the month before, according to Statistics Canada. The decrease came on the back of strong export growth, which was up 4.1% from the month before.
- According to the US Census Bureau, the US goods trade deficit with Canada jumped to just over $2 billion in June from $1.5 billion in May.
- The goods trade deficit with the EU did shrink in June, to $11.7 billion from $13.4 billion the month before.
- But the deficit over the first six months of 2018 increased compared with 2017, to $77.6 billion from $69.9 billion.
Trump other major trade adversary, China, also appears to be winning the trade fight based on the president's metrics:
- The goods trade deficit with China increased in June by about $300 million from the month before — and by almost $1 billion from June 2017.
- Through the first six months of 2018, the goods trade deficit with China hit $185.7 billion, up from $171.1 billion in the first six months of 2017.
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