- The latest data from the Department of Commerce shows the overall trade deficit at a 14-year high. The trade deficit with China shrank slightly
- Donald Trump has attacked trade deficits as harmful and attempted to reduce the U.S.’s using a trade war with China, but has since backed off
- It’s not clear that trade deficits are a negative indicator for a complex, national economy
The U.S. trade deficit expanded in August to a 14-year record, a blow to Donald Trump who had made reducing the debt a central goal of his administration. Data from the Department of Commerce indicates that the trade deficit had grown by almost 6% to $67.1 billion.
The figures outpaced expert projections of $1 billion less growth, according to Reuters. The trade deficit represents the amount by which imports outpaced exports, and can indicate an economy moving away from production. Overall, the U.S. imported $239 billion, a 3.2% increase, and exported $171.9 billion, a 2.2% increase.
The deficit with China decreased by 7%, from $28.3 billion to $26.4 billion. Decreasing the overall trade deficit was a focus of the Trump administration, but China in particular was targetted with an expansive suite of tariffs in 2018 and 2019.
The trade war caused harm on both sides of the Pacific and an overall transfer of activity away from U.S. and Chinese markets, but U.S. companies got hit worse. A September 2019 study from Moody’s Analytics placed the damage to the U.S. economy at 300,000 jobs and 0.3% gross domestic product. Other studies estimated that GDP losses could be double that.
Trump has stated that “trade deficits hurt the economy very badly.” On Tuesday, he tweeted that the U.S. is “leading the world in economic recovery.”