The Commerce Department announced this morning that the U.S. trade deficit grew to $59.8 billion in December, the worst reading in ten years. But that doesn’t begin to tell the story. The deficit in manufactured goods exploded in December to $77.3 billion, obliterating the previous record set only two months earlier. Look at this chart: Manf’d Goods Balance of Trade. Exports rose by $6.1 billion to $189.2 billion – a new record – while exports fell $1.8 billion to $111.9 billion – virtually the same reading as in March, 2012.
On an annualized basis, the December deficit in manufactured goods is $927 billion. It’s entirely possible that the deficit in manufactured goods will exceed one trillion dollars in 2019. The U.S. economy is headed for a train wreck if something isn’t done. The federal government can’t sustain the level of deficit spending needed to offset the trade deficit’s drain on the economy.
President Trump has got to get serious about halting the flood of imports that’s wrecking the manufacturing sector of our economy. The token tariffs he’s enacted so far are much too small and too narrowly focused to do anything other than take a small bite out of exporters’ profits. Trade deals don’t work. The rest of the world isn’t going to deal away their one trillion dollar surplus. The negotiations with China are a waste of time. He needs to raise the tariffs on all Chinese imports to at least 25%. He needs to put 25% tariffs on all auto, truck and parts imports.
So far Trump’s pledge to “Make America Great Again” has boiled down to nothing more than a tax cut sugar high that has boosted the economy only slightly. Americans who voted for Trump expected more.