The US trade deficit's biggest contraction on record came in 2009 when it shrank by more than $300 billion in a single year as a result of the recession then under way-and the resulting collapse in US demand for imported goods.
The U.S. trade deficit jumped almost 19 percent in December, pushing the trade imbalance for all of 2018 to widen to a decade-long high of $621 billion.
But most economists say that such increased Chinese purchases would likely only divert USA shipments from other foreign customers, shrinking the trade gap with China but leaving the global balance largely unchanged. Although the United States has imposed tariffs of 10 to 25 percent on $250 billion in imports from China (about half of total us imports from that country), China has played its "ace-in-the-hole" by allowing it's currency to fall by roughly 10 percent against the dollar. The retaliatory tariffs Trump provoked from China also hit major U.S. agricultural exports such as soybeans.
Would he really prefer that the USA economy not be humming?
Each country can inflict economic pain on the other, but the latest deficit numbers underscore that the potential magnitude of that pain is greater for the export-dependent Chinese economy.
The news comes after Trump insisted that a trade war with China would be "good" and "easy to win". During his tenure in the White House, Cohn tried and tried and tried again to get the president to understand that many of his economic views - on free trade, on manufacturing, on tariffs - were flat-out incorrect.
So much for trade wars being easy to win.
"The trade deficit is grossly misunderstood". That, too, leads to higher trade deficits. and it's one of many reasons Team Trump might want to cool it with the schadenfreude about other countries' economic woes.
A quick agreement with China may also put little effort on the embankment for Trump and his followers.
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Trump has repeatedly taken credit for equities strength, citing his own economic policies as the key driver.
Small or shrinking trade deficits are also not necessarily a measure of a healthy economy; in fact, as Bloomberg News' Shawn Donnan points out, the year the USA trade deficit shrank the most was 2009, which was not exactly a blockbuster year for the economy.
The gap between what the United States sells and what it buys from other countries rose to $59.8-billion in December from $50.3-billion in November, the Commerce Department said.
"We need to better protect intellectual property and better open the Chinese market to competition from our producers, or otherwise we're going to lose the high-technology products which are the backbone of growth in the United States".
Trump tax war propels U.S. trade deficit to 10 year high.
US exports fell for a third straight month, mainly on account of the strong dollar that made USA products more expensive overseas.
The trade deficit (or surplus when positive) is the difference in the value of goods that a nation exports minus what it imports.
As cash-flush businesses and consumers increased their spending, purchases of imported goods rose while the overvalued dollar weighed on exports. The trade war with China has been a dark cloud that has damped investment.
A ship loaded with containers is pictured at Yusen Terminals (YTI) on Terminal Island at the Port of Los Angeles in Los Angeles, California, U.S., January 30, 2019.