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
Trump doesn’t understand that the trade deficit has nothing to do with China. He is not fighting the Chinese. He’s fighting American corporate leaders. Put a tariff on China and they’ll just move production somewhere else that isn’t America. That has no actual effect on the trade deficit or American jobs.
But its good politics. His voters don’t understand either and he gets off as a tough guy protecting working class white folk.
When you wrote “He’s fighting American corporate leaders”, I think you mean, “He’s fighting the free market”. All corporate leaders do, or should do, is to take the steps that are best for their corporation. The free market, in turn, dictates what is best, and they merely follow. That is the way it does work, and that is the way it should work. The problem is that what is lacking is the natural self-correction.
What is the natural self-correction? What should happen is trade imbalances should cause the dollar to fall, eliminating the advantages of producing things overseas. Why does the dollar remain strong? It is partly because the USD is the world’s reserve currency, meaning that others in the world keep buying USD. The balance of trade would not look nearly as bad if you included US exports of green paper. A second reason why the USD remains strong is because much of the world is much more unstable than the US, making the US a “safe” place to invest.
In time both of the above factors will change, and then the USD will behave normally, falling in response to trade deficits, and then corporations will stop exporting jobs.
As a side note, suppose US Corporations all did like Air-Way and Hoover, and kept jobs in the US? Would that protect American jobs? Hardly. It would just mean that foreign competitors would destroy them. Hoover eventually gave in, and exported jobs, but they have a much smaller market share now. Air-Way continued to manufacture in Alabama until their end, but they are gone now.
Every time Trump opens his mouth on tariffs the USD goes up. Combined with interest rate increases the strength of the USD is decimating US exporters and making imports even cheaper for US consumers to buy. The guy is clueless and he doesn’t listen to anyone who has actual knowledge about how these things work. But the cult followers of the Great Leader, Kim Il Trump, eat it up.
You always say Trump will howl about the trade deficits rising under his watch but he never does. He just ignores it. He will be tweeting about the drop in the unemployment rate, that is for sure.
Given the tax cut and the strong economy, consumers are spending, as you would expect. Most consumer goods are made overseas.
Orwellian to say the least,runnin massive deficits/dept after a decade of “recovery”,low unemployment “rate”in a “booming” economy 3.5 trillion straight months of (simulated)job growth,1.6 billion (with a b)straight quarters of positive GDP growth “rate”.Is big D (default)next?