The Commerce Department Wednesday will almost certainly report that — despite more than two years of President Trump’s “America First” policies — the United States last year posted the largest merchandise trade deficit in its 243-year history.
The nation’s trade gap with China also is likely to set a record, underscoring the stakes for the president’s bid to reach a deal with Chinese President Xi Jinping as soon as this month.
The department’s final 2018 trade report, which was delayed by the government shutdown, is expected to show that the U.S. bought nearly $900 billion more in foreign goods than it sold to customers in other countries. That would top the 2006 record of $838.3 billion, set as the housing bubble was peaking, and would mark the third consecutive year of rising trade deficits.
It has been evident for months that the president was failing to shrink a trade gap that he calls “unsustainable” and that he says represents a massive transfer of wealth from Americans to foreigners. Over the past year, even as he imposed tariffs on foreign-made solar panels, washing machines, steel, aluminum and assorted goods from China, imports roared ahead of exports.
The president thus begins his reelection drive with a core campaign promise unfulfilled — and with a recent flurry of economic research showing that his embrace of tariffs is damaging the U.S. economy.
Economists say the trade deficit is swelling because of broad economic forces, including a chronic shortfall in national savings that was exacerbated by last year’s $1.5 trillion corporate and personal income tax cut. As cash-flush businesses and consumers increased their spending, purchases of imported goods rose while the overvalued dollar weighed on exports.
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