Trade Deficit Widens Despite Tariffs: Record Deficits With China, Mexico
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $53.2 billion in August, up $3.2 billion from $50.0 billion in July, revised.
Exports, Imports, and Balance
- August exports were $209.4 billion, $1.7 billion less than July exports.
- August imports were $262.7 billion, $1.5 billion more than July imports.
- The August increase in the goods and services deficit reflected an increase in the goods deficit of $3.6 billion to $76.7 billion and an increase in the services surplus of $0.4 billion to $23.5 billion.
- Year-to-date, the goods and services deficit increased $31.0 billion, or 8.6 percent, from the same period in 2017.
- Exports increased $129.6 billion or 8.4 percent. Imports increased $160.6 billion or 8.4 percent.
Exports
- Exports of goods decreased $1.9 billion to $138.9 billion in August.
- Industrial supplies and materials decreased $2.4 billion.
- Soybeans decreased $1.0 billion.
- Consumer goods increased $1.6 billion
- Exports of services increased $0.2 billion to $70.5 billion in August.
Imports
- Imports of goods increased $1.7 billion to $215.6 billion in August.
- Automotive vehicles, parts, and engines increased $1.0 billion.
- Cell phones and other household goods increased $0.9 billion.
Balance of Trade by Nation
China Canada Mexico Two-Quarter Total
- China: -178.785 Billion
- Mexico: -35.779 Billion
- Canada: +3.290 Billion
Through two quarters, the balance of trade with China and mexico are on a record negative pace. The US has a small surplus with Canada.
Headwinds for Trump
- The rising US dollar makes goods exports from the US more expensive and imports cheaper.
- Tariffs and rate hikes by the Fed both act to strengthen the dollar.
- The global economy is weaker than the US economy. This serves to boost imports and reduce exports.
Trump is fighting a counterproductive battle that he does not even understand.
China retaliatory tariffs on US soybeans target the US farm belt in a battle highly likely to hurt Republicans in the mid-term elections.
Trump's ballyhooed deal with Mexico and Canada was nothing more than hot air that accomplished nothing.
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Mike "Mish" Shedlock