US trade deficit in goods reaches record high in August
The US trade deficit in goods reached a record high in the month of August, according to new data published by the Commerce Department on Tuesday.
With less than one month remaining before the presidential election and the US economy still struggling from the coronavirus pandemic, the latest numbers show that the overall trade deficit in goods and services is now 56 per cent higher than when Donald Trump was sworn into office in January 2017.
A trade deficit refers to the gap between how much the US buys from overseas and how much it sells, and it is a measurement that Trump had insisted over the years was a sign of the US economy's poor health.
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Trump has railed against trade deficits for years, long before he ran for president, and especially when talking about those coming from China. On the campaign trail in 2016, Trump accused China of "raping" the US with trade.
In January, at the signing ceremony for the "phase one" trade deal with Beijing, Trump said about trade: "It's probably the biggest reason why I ran for president".
According to the Commerce Department, the US' overall deficit, including both goods and services, reached US$67.1 billion in August - a 5.9 per cent jump from July, and the highest number since the George W. Bush administration. Trade in goods alone reached a record deficit of $83.9 billion.
The US deficit for goods traded with China shrank to US$29.8 billion in August, but the monthly total was still higher than any other month this year except July.
In a report on the August trade numbers, Chad Bown, a former senior economist in the White House who is now at the Peterson Institute for International Economics, found that China continues to fall short of its commitments to purchase more American goods under the deal.
Despite that, and even as the president has repeatedly attacked Beijing in for other reasons - particularly over the coronavirus pandemic - Trump has mostly refrained from speaking about the trade deficit in recent months.
US Trade Representative Robert Lighthizer said the increased deficit was merely a result of the coronavirus pandemic.
"Basically, many of our partners were more negatively affected by the pandemic than we were," he said. "Overall, the Trump trade policy is working in spite of the virus."
But experts said the high deficits seemed to be of Trump's own making.
"Imposing tariffs, conveying unpredictability, and issuing threats don't move the trade deficit numbers as once again confirmed by today's trade numbers," said Wendy Cutler, a former acting deputy US trade representative.
"The administration came into office focused like a laser on reducing the US trade deficit," said Cutler, who is now vice-president and managing director at the Asia Society Policy Institute think tank in Washington. "By its own self-proclaimed measurement, it has failed."
"I'm not surprised by these numbers," added Michael Klein, a professor at the Fletcher School of Law and Diplomacy at Tufts University. "The trade deficit with China is probably reflecting trade policy."
Klein, a former chief economist in the Treasury Department's office of international affairs, said the overall deficit was a sign of multiple factors affecting the US economy right now, from Trump's trade policy to the US government's own budget deficit to the struggles facing individual Americans because of the coronavirus.
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This article originally appeared on the South China Morning Post (SCMP).
Copyright (c) 2020. South China Morning Post Publishers Ltd. All rights reserved.
