Wednesday, March 7, 2018

How's our trade deficit doing With Trump Tariffs looming

With all of the talk about trade and tariffs, let's look at today's release on the US balance of trade from the Bureau of Economic Analysis.

Overall, the US trade deficit continued to rise in January, and is at levels we have not seen in the last decade.
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $56.6 billion in January, up $2.7 billion from $53.9 billion in December, revised....

January exports were $200.9 billion, $2.7 billion less than December exports. January imports were $257.5 billion, down less than $0.1 billion from December imports....

Year-over-year, the goods and services deficit increased $7.9 billion, or 16.2 percent, from January 2017. Exports increased $9.7 billion or 5.1 percent. Imports increased $17.6 billion or 7.4 percent.
So yes, we are taking in more than we are sending overseas, but both imports and exports are going up.

Looking at the particular sectors Trump wants to put tariffs on, the report has that information too.

Balance of trade, Jan 2018
Iron and steel products
Exports $1.44 billion
Imports $3.27 billion

Bauxite, Aluminum and Alumina
Exports $696 million
Imports $1.46 billion

So there are significant imbalances here. Now, that may not be a bad thing per se, because maybe it's helping consumers enough to make up the difference, and with higher education levels, maybe not as many people are needed for these jobs. But this could be also a result of outsourcing, since obviously we also make and sell aluminum to other parts of the world along with using it here. And maybe there's a point to be made that this needs to be evened out, if it's cost jobs in these industries.

The problem is not that Trump wants to give tariffs to potentially level the playing field for American producers and jobs. The problem is that Trump wants to recklessly impose this on ALL countries we trade these products with.

The report that includes the trade deficit also includes US trade balances with all countries, so let's look at how we stand up in trade of goods last month (which steel and aluminum falls under).

EU -$15.04 billion
Canada -$1.50 billion
Mexico -$5.61 billion
China -$35.52 billion
U.K. +$313 million
Hong Kong +$2.65 billion

You can see that some places are near parity on on this issue, or places we run a surpluses with. And the EU has similar (if not better) work standards that don't allow it much of an advantage on price or pollution or anything like that. Those places shouldn't be getting slapped with the same tariffs as a place that uses substandard products and pays $3 an hour.

That's my disagreement with the tariffs - not that they exist, but that it's an example of how TrumpWorld doesn't think these things through in any way, and it sets up the US to lose when it comes to selling its products to other countries that aren't cheating us on trade.

Let's see how this progresses. The Washington Post was reporting today that the tariffs against Canada and Mexico may be suspended while NAFTA discussions continue. And maybe pressure from Wall Street and his own GOP makes Trump back off. But a rising trade deficit is intriguing to note in light of all of the things going on with trade policy these days.

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