Ex-President Donald Trump failed in one of his main economic goals-reducing America's huge trade deficit with the world-during his four years in office.
Instead of Trump's hoped-for trade surplus, the United States posted the highest trade deficit in its total world trade during his term. Data released by the Department of Commerce on Friday shows the combined U.S. goods and services trade deficit jumped 41% to $679 billion in 2020 from $481 billion in 2016, the year before Trump took office.
The merchandise trade deficit alone skyrocketed to $916 billion, a record high and a 21% climb from 2016. It was a telling indicator of the utter failure of Trump's uncalled for trade wars against the world launched to support his America First agenda.
Economists said Trump failed to erase the trade deficit because this major economic metric is driven more by macroeconomic factors such as how much a country spends and saves than it is by tariffs and foreign trade policies.
"The Trump administration never had a feasible plan for reducing the trade deficit," said Mary Lovely, a senior fellow at the non-profit Peterson Institute for International Economics.
"Their 2017 tax cut ensured that the U.S. as a whole would continue to spend more than it produced, hence the need for a current account deficit. The tariffs on China reduced imports from China, but these were mostly replaced with imports from other sources."
Trump's trade war the world was based mostly on imposing heavy punitive tariffs on foreign goods such as those from the European Union entering the U.S. As expected, U.S. trading partners retaliated with tariff increases of their own on American exports to their countries. Hit hard by these tariffs were U.S. agricultural exports.
"When factoring in retaliation, the costs of this wrongheaded approach is measured in the hundreds of billions," said Michael Smart, a managing director at Rock Creek Global Advisers, an international economic policy advisory firm based in Washington, D.C.
The U.S. trade deficit with Vietnam, Thailand, Taiwan, Philippines, Malaysia, South Korea, Indonesia, Russia, France, Germany, Ireland, Italy, and Switzerland increased in 2020 as against 2019.
Trump's tariff war also imposed higher costs on U.S. businesses and consumers. U.S. Customs and Border Protection (CBP) collected $74.4 billion in tariffs on imported goods during the fiscal year 2020 that ended September 30. This figure, which was paid for by U.S. importers, was more than double the import taxes CBP collected before Trump took office and led to price increases in goods and commodities sold in the U.S.
However, Trump was successful in reducing the huge U.S. trade deficit with China due to tariffs he imposed on more than $350 billion worth of Chinese goods. Commerce department data shows the trade deficit with China amounted to $311 billion in 2020, down significantly from a record-high $419 billion in 2018 when Trump was still in office.
