Trump's Trade War: A Consequential Act of Economic Malpractice

Strategic Insights -

The US trade deficit is at a historic high, with a total of $67 billion in August, the largest since August 2006. This stems from a combination of factors, including other countries' persistent trade surpluses, US companies outsourcing jobs, and the reluctance of US policymakers to address these issues. The Trump administration's failure to control the virus and its erratic economic policies have exacerbated the problem. Furthermore, the administration's trade war has resulted in a trade deficit of $84 billion in manufactured goods, the largest on record.

Key Takeaways:

  • The US trade deficit in August was $67 billion, its highest level since August 2006.
  • The trade deficit in manufactured goods was $84 billion, the largest on record with data starting in 1992.
  • The tariffs imposed by the Trump administration were mostly paid for by American consumers and producers, not foreign companies exporting to the US.
  • The determinants of persistent trade deficits include other countries' persistent trade surpluses, US companies outsourcing jobs, and the reluctance of US policymakers to take action.
  • The Trump administration's tax plan sharply increased the incentives to offshore production and opposed efforts to boost working bargaining power.
  • A robust stimulus package and other economic policies are needed to offset the drag from trade deficits.
  • Other recovering economies must stimulate their economies to prevent the US trade deficit from worsening.
  • Key components of the Biden agenda include taking the offshoring incentives out of the tax code, strengthening American unions, onshoring vital supply chains, and enacting strong domestic public investment in areas like clean energy.

Statistics:

  • $67 billion: US trade deficit in August, the largest since August 2006.
  • $84 billion: Trade deficit in manufactured goods, the largest on record with data starting in 1992.
  • $425.6 billion: U.S tax dollars that have gone to firms that have been certified by the U.S. government as having offshored over 200,000 jobs during the Trump administration.
  • 2017: Year in which the Trump administration's tax plan was implemented.
  • $200,000: Number of jobs that have been offshored by firms certified by the U.S. government during the Trump administration.

Sources:

  • Public Citizen
  • [1] Bernstein, J. & Baker, D. (2020) - Jared Bernstein and Dean Baker is first mentioned in the article