The U.S. trade gap is currently on track to hit a ten-year high, despite a series of tariffs imposed on products and raw materials around the world by the Trump administration. The deficit climbed $3 billion to $46.3 billion in June from $43.2 billion in May, the Commerce Department reported Friday. That was the first increase in four months and the quickest uptick since November 2016.
The deficit tallied $291 billion in the first six months of 2018, compared with $272 billion the first half of 2017.
Trump’s measure of success at his Ohio speech appeared to be how much tariffs are hurting China. He noted stocks are down in China, which he said is weakening the country’s bargaining power over tariffs. But Bloomberg pointed out that U.S. stocks have yet to regain strong January performances since the escalating trade war.
Still, despite the data, Trump reiterated in a tweet Sunday that his tariffs are working “big time.”
Most economists predict the uptick in the trade gap will increase over the rest of the year, Marketwatch reports. That means the annual deficit would likely surpass last year’s $552 billion total trade gap and hit the highest level since 2008.
Trump also oddly boasted in Ohio that the tariffs would help the U.S. pay off its $21 trillion debt (Trump is responsible for $1.9 trillion of debt). But the tariffs are essentially taxes on American businesses (and consumers), not on foreign governments. Also, Trump’s tariffs so far have been levied on $85 billion worth of foreign goods, which might cover about .1 percent of the debt, notes The Washington Post.
U.S. exports hit a record high in May as buyers stocked up on products before the tariffs. But that fell off in June, especially for cars, trucks, soybeans, drugs, jewelry and planes, according to the data.
Economists emphasize that trade deficits aren’t always bad news — though the president believes they are. The U.S. can buy more because the economy is strong. Americans have consumed more than they produce compared to many other nations for decades, they say.
Also, the dollar is strong — but that makes American exports more expensive for foreign buyers.
But economists now worry that a continually widening trade deficit — which will be exacerbated if Trump keeps upping tariffs — will slow the U.S. economy in the second half of the year, reports The Wall Street Journal.