The U.S. merchandise trade deficit was 891.2 billion dollars in 2018, the highest in American history. www.washingtonpost.com/...
Trump’s tariffs, trade wars and tantrums did nothing to cut the trade deficit. They were, at best, a distraction. In fact, because the tariffs and trade wars reduced income across America, especially in hard pressed rural America, they may have made the trade deficits grow by reducing American savings. The fundamental cause of the ballooning trade deficit was the Trump tax cut which caused a huge federal budget deficit. Basic economic theory says that increasing budget deficits that are not offset by domestic savings will lead to increasing trade deficits. All of Trump’s trade tantrums are performance art to fool economically illiterate regular Americans into thinking Republicans care about their economic plight. In an economy like ours going at full tilt tariffs tax the little people and increase trade deficits. Trump and Republicans have shifted taxes from corporations to average Americans and left regular Americans with a huge amount of debt in addition to the lost income.
The Commerce Department said Wednesday that — despite more than two years of President Trump’s “America First” policies — the United States last year posted a $891.2 billion merchandise trade deficit, the largest in the nation’s 243-year history.
The trade gap with China also hit a record $419 billion, underscoring the stakes for the president’s bid to reach a deal with Chinese President Xi Jinping as soon as this month.
The department’s final 2018 trade report, which was delayed by the partial government shutdown, showed that the United States bought far more in foreign goods than it sold to customers in Africa, Asia, Europe and North America. The shortfall topped the 2006 record of $838.3 billion, set as the housing bubble was peaking, and marked the third consecutive year of rising deficits.
The basic economics is spelled out in a simple equation in Wikipedia. en.wikipedia.org/...
Trade Deficit = Budget Deficit + Investment — Saving .
Simply put, in an economy running at near full employment like ours today, increasing the federal budget deficit will cause the trade deficit to go up unless the money goes into increased savings. In fact, average Americans have had an effective loss of wages, so the trade deficit exploded.
The regions most heavily impacted by Trump’s tariffs are rural Republican strongholds. Detailed economic modeling of Trump’s protectionist policies found that retaliatory tariffs hurt Trump voters.
www.econ.ucla.edu/...
We analyze the short-run impacts of the 2018 trade war on the U.S. economy. We estimate import demand and export supply elasticities using changes in U.S. and retaliatory tariffs over time. Imports from targeted countries decline 31.5% within products, while targeted U.S. exports fall 11.0%.
We find complete pass-through of U.S. tariffs to variety-level import prices.
We compute the aggregate and regional impacts in a general equilibrium framework that matches these elasticities. Annual consumer and producer losses from higher costs of imports are $68.8 billion (0.37% of GDP). After accounting for higher tariff revenue and gains to domestic producers from higher prices, the aggregate welfare effect is a $7.8 billion loss (0.04% of GDP).
U.S. tariffs favored sectors located in politically competitive counties, but retaliatory tariffs offset the benefits to these counties. We compute that tradeable-sector workers in heavily Republican counties are the most negatively affected by the trade war. (bold added for visibility on Dailykos)