The BEA’s U.S. International Trade in Goods and Services report for August 2021 shows another record trade deficit.
Trade Details
- August exports were $213.7 billion, $1.0 billion more than July exports.
- August imports were $287.0 billion, $4.0 billion more than July imports.
- The August increase in the goods and services deficit reflected an increase in the goods deficit of $1.6 billion to $89.4 billion and a decrease in the services surplus of $1.4 billion to $16.2 billion.
- Year-to-date, the goods and services deficit increased $140.8 billion, or 33.7 percent, from the same period in 2020.
- Exports increased $244.3 billion or 17.5 percent. Imports increased $385.1 billion or 21.2 percent.
Imports Surge
The trade deficit widened as imports rise 1.4% in August while exports rose only 0.5%.
The net impact was the widest monthly net deficit in history at -$73.25 billion.
Note that the US trade surplus in services is steadily shrinking. It’s down from a peak of $26.72 billion to $16.16 billion now.
Biden Barks Up Trump’s Tree
Biden is aware of the growing deficits and he will Continue Trump’s Chaotic Policy on China, Just More Politely
If tariffs worked, Trump’s tactics would have succeeded.
Tariffs are worse than useless. All they will do is drive up prices with inflation already raging.
Yet, Biden is threatening more of them.
Giant Sucking Sounds, Mexico, NAFTA, Global Trade, and Gold
Everyone wants to export to the US, and they do.
Trump did not fix the problem and Biden won’t either. Neither understands the basic problem.
The Basic Problem
The “absence of capital controls has made the United States the default adjustment for global capital imbalances.”
Gold was that capital control mechanism and now there are none. Trade agreements with China are not worth the toilet paper they are printed on.
How much longer this setup can continue before it blows up in a currency crisis, war with China, or some other major economic disruption remains a key mystery.
For discussion of why tariffs will not work including many charts please see Giant Sucking Sounds, Mexico, NAFTA, Global Trade, and Gold
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Mish
Comparative advantage is not a natural feature in trade
contrary to what Adam Smith described. Most often it is an acquired advantage
through human ingenuity and favorable tax and regulatory measures that allow
this ingenuity to flower and gain market share. A good example would be California
and Oregon marijuana growers thanks to deregulation and a high quality controls
impose on them by government environmental and health standards have specialized
in high quality product. Because of these factors their produce is in much
demand in Mexico and a thriving export market has grown up. Hopefully they can
crack the Chinese market and eventually reduce our deficit.
It’s a market ready to be taken. Sure it’s illegal in China
for now but if the British and us send a few warships to say Canton to convince
them of the benefits of Californian pot then it could open up the whole country
again like it was in the 19th century. The profits could be immense. We
start with pot and then move up the chain to more high-added value drugs. Of
course we will have to negotiate with the Chinese government for territory to
place our warehouses and such but once hooked they shouldn’t be a problem.
Well they are trying to ban one of our most successful
exports which is the Effeminate Man style. Seems they are afraid of
that emasculating their men and cause their birthrate to go below even lower
than it is now. There is more than one way to skin a cat and some ways are very
subtle.
The real goods deficit increased $1.9 billion to $101.8 billion in August.
• Real exports of goods increased $0.7 billion to $146.3 billion.
• Real imports of goods increased $2.6 billion to $248.1 billion.
Isn’t there a need, being the dollar is the world’s reserve currency, for foreign countries to acquire dollars from the US by exporting to the US in order for them to trade with the rest of the world?
Apparently Biden and Trump thinks they can shift our particpation in the market place to a government favored position with the use of financial pentalites called taxes (tariffs). Reminds me of Obamacare where financial penalties were created to get a free people to partcipate in a government approved and favored marketplace.
free people to partcipate in a government approved and favored
marketplace.”
I raised my kids on his books and surprisingly they came out
normal.