The trade results for August are in and they couldn’t be any worse, though given the current trajectory, they may very well be worse in September.
The overall deficit soared to $67.1 billion, beating the record set only one month earlier by $3.7 billion. More importantly, the deficit in manufactured products continues to explode, jumping $2.9 billion from the previous month’s record to $83.2 billion – an annualized rate of almost exactly one trillion dollars. Here’s a chart of the deficit in manufactured goods: Monthly trade deficit in manufactured goods.
China didn’t help a bit. If they lived up to the agreement they made in the “Phase 1” trade deal, the deficit in manufactured goods would have been lower by $4.5 billion. They didn’t. Not even close. Not only did they not meet the goal in any category of goods, they even fell behind the 2017 baseline by a half billion dollars. In two of the four categories – energy and agriculture – they did import more than the 2017 baseline, but barely. They’ve made no progress at all toward meeting the goals set for 2020 in the deal. Here’s the chart: Monthly “Phase 1” trade deal results.
The deficit with China did drop slightly, falling to $29.8 billion from $31.6 billion in July. But it was of no benefit to America. The big winners from the success that Trump has had in reducing the deficit with China – thanks to the tariffs enacted before the “Phase 1” deal – have been Mexico and Vietnam. The monthly trade deficit with Mexico has quadrupled since Trump took office, soaring to a new record of $12.8 billion in August (beating the previous month’s record by a whopping $2.1 billion), compared to $3.8 billion when Trump took office in January of 2017. The deficit with Vietnam also blew past the previous month’s record, rising $0.8 billion to $7.6 billion, more than double when Trump took office.
To be fair, the trade deficit in manufactured goods was dropping nicely until the pandemic hit. It had fallen to $59.9 billion in February, but has risen dramatically since. Blame the pandemic. All of the money that Americans used to spend on dining out, travel, gym memberships and entertainment is now being spent on goods. Much of the stimulus money meant to help Americans is now in the hands of foreign manufacturers.
Though Trump has done far more than any president in decades to address the trade deficit and to bring manufacturing jobs back to America, he still needs to be much more aggressive with imposing tariffs on a wide range of countries who feed off of the American market to sustain their bloated labor forces. If he had, he’d be a shoo-in to win the election instead of finding himself the underdog. America will never be “great again” until store shelves are stocked with products “Made in the USA.”