U.S. Posts Record Annual Trade Deficit

[jmyrlefuller]

by Paul Kiernan · March 6, 2019

The U.S. posted its widest monthly trade gap since 2008 in December and a record annual deficit in goods as sturdy economic growth underpinned higher spending by American consumers and businesses.

The international trade deficit in goods and services widened 19% in December from the prior month to a seasonally adjusted $59.8 billion, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a $57.3 billion gap.

Over the course of 2018, Mr. Trump imposed tariffs on a range of goods that the U.S. imports from other countries, particularly China, in hopes of giving American producers a competitive edge. He publicly lambasted companies that outsourced jobs, renegotiated pacts with major U.S. trade partners like Mexico, Canada and South Korea, and rankled longtime European allies by deeming their steel and aluminum exports a threat to national security.

Still, the trade gap swelled 12% from 2017 to $621 billion.

Highlighting the limitations of Mr. Trump’s trade policies, the goods deficit widened most with China, the U.S.’s largest commercial partner and the main focus of White House efforts.

(excerpt)

https://www.wsj.com/articles/december-2018-trade-data-from-u-s-commerce-department-11551877494

[ABX]

Something people don't understand around the trade deficit hyperbole and propaganda- wealthier nations will always have a deficit with those less wealthy. We consume more than we produce, and that isn't necessarily a bad thing.

I have a trade deficit with my grocery store. Does that mean I need to stop using them and start my own farm and ranch or is it my time value is such it is better spent in other areas than lower return production?

WASHINGTON—The U.S. posted its widest monthly trade gap since 2008 in December and a record annual deficit in goods as sturdy economic growth underpinned higher spending by American consumers...

....The international trade deficit in goods and services widened 19% in December from the prior month to a seasonally adjusted $59.8 billion, the Commerce Department said Wednesday. Economists surveyed by The Wall Street Journal had expected a $57.3 billion gap.....

https://www.wsj.com/articles/december-2018-trade-data-from-u-s-commerce-department-11551877494

[Mod2]

Topics merged.

[Hoodat]

Gee, if only someone had warned us that this would happen when tariffs are raised.

[jmyrlefuller]

I have a trade deficit with my grocery store. Does that mean I need to stop using them and start my own farm and ranch or is it my time value is such it is better spent in other areas than lower return production?

If you follow that model, you also have to factor in that you have a trade surplus with your employer, more than enough to cover your trade deficit with the grocery store and other expenses.

The U.S. does not have an overall trade surplus. So not only does it have a trade deficit with the grocery store, it has a trade deficit with everyone else around them, losing money to each one. Eventually we'll run out of money or resources to trade.

[thackney]

Eventually we'll run out of money or resources to trade.

That thought ignores the added value in work we do.  My wages do not equal my value to my client.  Refined exported product coming out of our refineries has greater value the imported crude oil.

[Hoodat]

Correct.  In business,  1 + 1 + 1 = 5

As long as the creation of wealth exceeds our trade deficit, we are OK.  The irony here is how the proponents of protectionism argued that tariffs were necessary to reduce the trade deficit (as if that was a problem) when in fact their policy has actually increased it.

[thackney]

Correct.  In business,  1 + 1 + 1 = 5

As long as the creation of wealth exceeds our trade deficit, we are OK.  The irony here is how the proponents of protectionism argued that tariffs were necessary to reduce the trade deficit (as if that was a problem) when in fact their policy has actually increased it.

Yes.  Also imports versus exports is not the only flow of dollars in and out of the country.

[InHeavenThereIsNoBeer]

I just can't get worked up about trade deficits.  Probably because I don't believe in them.

The flow of money is going more in one direction than the other.  So what?  Money isn't really all that special.  Mostly it just makes trade easier, as each party in the trade do not need to demand an appropriate amount of the other party's stuff at the moment.

But they're taking all our money!  So, we're taking all their stuff.  Eventually that money will come home to buy our stuff.  Who is going to complain?  The worker who gets paid to make it, or the person who sells it?

And then there's this we/our nonsense.  When I buy something from a foreign company, I don't use our money, I use my money.

[Absalom]

Protectionism applying trade tariffs, is far more a political than an economic weapon.
It was always a major component of R policy, during their political ascendancy, 
being applied almost 100 X post Civil War till FDR.

[roamer_1]

I just can't get worked up about trade deficits.  Probably because I don't believe in them.

The flow of money is going more in one direction than the other.  So what?  Money isn't really all that special.  Mostly it just makes trade easier, as each party in the trade do not need to demand an appropriate amount of the other party's stuff at the moment.

That's right - Money is just a way of keeping score. 
If I am fat and happy, what do I care if the other guy has more than me?

If my end of a deal is made, what do I care what the other end got out of the deal?

Same thing goes, all the way up the ladder...
 

[IsailedawayfromFR]

From below article, it appears 2018 ain't what's going on this year:

But even as Chinese economic officials try to stave off the effects of the U.S. tariffs, exports have swooned. Chinese exports to the United States were down 14.1 percent in the first two months of 2019 compared with the previous year. The falloff has dragged down the Chinese economy as a whole.
Trump's trade war puts China's once vaunted economy in real peril
https://www.washingtontimes.com/news/2019/mar/19/trump-trade-war-slows-china-economy-growth/

[InHeavenThereIsNoBeer]

From below article, it appears 2018 ain't what's going on this year:

But even as Chinese economic officials try to stave off the effects of the U.S. tariffs, exports have swooned. Chinese exports to the United States were down 14.1 percent in the first two months of 2019 compared with the previous year. The falloff has dragged down the Chinese economy as a whole.
Trump's trade war puts China's once vaunted economy in real peril
https://www.washingtontimes.com/news/2019/mar/19/trump-trade-war-slows-china-economy-growth/

It's almost as if companies pulled forward their imports from China at the end of 2018 before the tariffs jumped sharply at the beginning of this year.