The U.S. trade deficit for the month of January was posted yesterday by the Bureau of Economic Analysis. It was horrible. President Trump took office on January 20th, but he can hardly be held responsible for any of the January results. This is all on former President Obama.
How bad was it? The overall trade deficit rose to its worst level in nearly five years – $48.5 billion. At $62.1 billion, the deficit in manufactured goods just missed its all-time worst reading of $62.5 billion set in March of 2015. As you can see from this chart, if the trend in manufactured goods continues, we’ll have a new record very soon and, without the change in trade policy promised by President Trump, it will likely get worse from there: Manf’d Goods Balance of Trade.
Then there’s the export numbers. In January of 2010, lacking the courage to take on the problem with imports, President Obama vowed to double exports in five years in an effort to turn the U.S. into more of an export-driven, Germany-like economy. It never happened and never even came close. In January of 2017 – seven years after Obama made that promise – total exports, at $192 billion – remained below the October, 2013 level. Worse yet, exports of manufactured goods were below the level reached in September, 2011 – up only 26% from when Obama made that promise. And that increase was due entirely to global economic recovery from the 2009 recession and had nothing to do with any real improvement in America’s export position.
So that closes the book on Obama’s trade policy, which was a total failure. Actually, if President Trump follows through on his promise of tariffs (or border tax, or whatever you want to call it), this closes the book on a seven-decade-long experiment with free trade and globalization, begun in 1947 with the signing of the Global Agreement on Tariffs and Trade that, by any measure of its effect on the American economy, has been a complete disaster.
- America’s trade surplus dwindled until we ran our last trade surplus in 1976.
- 41 consecutive years of trade deficits has yielded a cumulative deficit of $14.4 trillion. During that time, the national debt, which is closely linked to the trade deficit, grew by $19.4 trillion. In 1976, the national debt was only $0.5 trillion. Virtually all of our national debt is due to the cumulative trade deficit since 1976.
- During this period, family incomes and net worth have declined, our infrastructure has crumbled, and our nation has been bankrupted. The manufacturing sector of the economy has been gutted. More than ten million manufacturing jobs have been lost. The United States, once the world’s preeminent industrial power, has been reduced to a skid-row bum, begging the rest of the world to loan us money to keep us afloat.
This is all on you now, President Trump. You own it. You’ve promised to straighten out this mess. America is watching and waiting.