As announced by the Commerce Department, the trade deficit fell again in October to $47.2 billion, the lowest since March of 2018. And the all-important deficit in manufactured goods fell to $66.9 billion, the lowest level since June of 2018, and nearly $10 billion less than the record set one year ago. Most notably, thanks to the tariffs enacted on Chinese imports, the deficit with that country fell to $31.3 billion. Year-to-date, the deficit with China is $294.5 billion, down by over $50 billion from the same time last year. This is proof positive that the tariffs enacted by the Trump administration are working.
What about the effect on America’s farmers? Contrary to reports about how much they’ve been hurt by retaliation by the Chinese, overall exports of foods, feeds and beverages are actually up by $59 million year-to-date. And soybean exports are up dramatically by $3.2 billion to $20.3 billion year-to-date. See for yourself on page 20 of this report from the Commerce Department: https://www.bea.gov/system/files/2019-12/trad1019_2.pdf. How can this be, when the media is constantly reporting that farmers are angry over lost exports due to Trump’s tariffs? As in all occupations, some farmers are Republicans and some are Democrats. Some are doing well, some not so well. If you cherry-pick which farmers you want to listen to, you can build a narrative that makes it sound like the farming industry is being hurt by the tariffs. The real data paints an entirely different picture.
Before I leave the subject of the trade report, it’s worth noting here that, year-to-date, imports of “automotive vehicles, parts and engines” stands at $316.7 billion (page 23 of the report), vs. exports of only $136 billion (page 21) – a deficit of nearly $180 billion for that one category of products alone. The Trump administration has been threatening to levy a 25% tariff on all auto imports. I can’t understand what in the world he’s waiting for! Such a move would rapidly shift demand toward domestic makes in a big way. The tariffs should be applied to Mexico as well. If President Trump wants to get the new USMCA agreement with Mexico and Canada passed by Congress, who’s been sitting on it for over a year now, just tell them that the tariffs on Mexican imports will stay in place until USMCA is passed, and then watch how fast Congress moves!
The news on unemployment was just as good. The economy added 266,000 jobs in November, and September and October were revised upward by 41,000 combined. Here’s the report: https://www.bls.gov/news.release/empsit.nr0.htm. Unemployment fell to 3.5%. And per capita employment held at 48%, it’s highest level in almost ten years. Here’s a chart: Per Capita Employment.
This is all great news and none of it would be happening without the U-turn on trade policy that the Trump administration made when it started levying tariffs. We need more tariffs, applied to more countries that are running big surpluses with the U.S., until a balance of trade is restored.