United States trade deficit hits 10-year high as Trump trade wars backfire

US Trade Representative Robert Lighthizer

China and the United States are in the final stages of completing a trade deal, the Wall Street Journal reported on March 3.

"The administration's fiscal policies have helped to boost the trade deficit", the Alliance for American Manufacturing president Scott Paul told Reuters. They also found the initial cost of Trump's duties to the USA economy was in the billions and being borne largely by American consumers.

Trump also slapped tariffs, which are a kind of tax on imported goods, on steel and aluminum imports, a move that led to retaliation from some US trading partners.

"While it will take time for economic data to stabilise from the current slowdown, policy shifts by central banks and governments, especially in the USA and China, should help support investor confidence for now", said Tai Hui, Asia-Pacific chief market strategist at JPMorgan Asset Management. The retaliatory tariffs Trump provoked from China also hit major United States agricultural exports such as soybeans. But as trade attorney Scott Lincicome notes, Trump is unable to claim credit for that good news because he's spent so much effort promising the opposite.

Earlier this year, Derek Haigwood, a representative of the American Soybean Association, said he expects to see the impact of trade issues in the next, 2018/2019, marketing year. Their research also revealed that workers in many Republican-leaning counties suffered the most economically from Trump's trade disputes.

Trump persists with the import levies even as some supporters push for him to also act on other forces fuelling the trade deficit, including a robust dollar.

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That study also found that workers in Republican-leaning counties, especially in farm states, suffered the greatest losses from tariffs that U.S. trading partners imposed in retaliation for the president's actions. Yet evidence is growing that the US economy is a net loser so far. US and Chinese officials have recently signaled that they're close to some kind of agreement, although China has only bolstered its commitment to investing in and developing its technology sector and questions about how to enforce any trade rules remain. They also were causing the diversion of $165 billion a year in trade leading to significant costs for companies having to reorganize supply chains.

If talking doesn't yield progress, Lighthizer said the U.S. will respond with "proportional" and "unilateral" action, likely referring to tariffs. But that doesn't mean the trade war ends.

Trump campaigned on raising some tariffs on imports to 35 percent.

Trump announced in a Twitter post last month that he would delay another planned increase in tariffs on $200 billion worth of Chinese goods that was originally set for 1 March. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.

Still, the biggest takeaway from the new trade data is not that the tariffs predictably failed to do what Trump thought they would; it's that the USA economy is powered by the individual decisions of millions of people and businesses, and that entity is far too complex and powerful to be controlled by the White House.

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