The jobs report released Friday showed that the U.S. added 250,000 jobs in October. At the same time, the U.S. trade deficit with China reached a record high, passing $40 billion in a single month for the first time in U.S. history.
How good was the jobs report?
In addition to the strong jobs numbers, unemployment stayed steady at 3.7 percent while annual wage growth passed 3 percent. Employment numbers for September had been impacted by Hurricane Florence, but the Bureau of Labor Statistics concluded that Hurricane Michael (which hit Florida on Oct. 10) had “no discernible effect on the national employment and unemployment estimates for October.”
What about the trade deficit?
A trade deficit occurs when a the value of a nation's imports exceeds the value of its exports. Economists disagree about whether or not this is actually a bad thing. One of the reasons behind a trade deficit could be more disposable income among American citizens, which could lead to more purchases and thus more imports. It can also be an indicator of a weakening U.S. manufacturing sector, and less exports to other nations.
Trump, however, sees the trade deficits as bad for the country. He has repeatedly cited the U.S. trade deficit as a reason behind the tariffs he has imposed on various countries, which he says can reduce the trade deficit.
In a July 20 CNBC interview justifying his trade policies, Trump said, “China, with China, $507 billion a year in deficits. With the EU, $151 billion. With Mexico, $120 billion — Mexico! Who would think Mexico. Mexico’s making a fortune. Plus, they have a tax, we don’t have a tax.” He added that he “could go through every country” listing deficits.
It's not entirely clear where Trump got the $507 billion number, which is more than the total number of all U.S. imports from China. The total U.S. trade deficit in 2017 with every nation around the globe was $566 billion, while the U.S. trade deficit with China for that year was $375 billion.
But the tariffs have not caused the trade deficit to decrease. In fact, the total U.S. global trade deficit for 2018 through September (the last month for which data has been released) was up $56 billion ($641,875,800,000 vs. $585,785,400,000) compared to January through September 2017.
Also, for the month of September, the trade deficit the U.S. has with just China reached $40,243,000,000. This is the first time that the U.S. Census Bureau has ever listed a trade deficit with China for a single month as being more than $40 billion.
If the trade deficit with China for the last three months of 2018 equals the deficit in their 2017 counterparts, it will pass $400 billion for the first time in U.S. history. So far every month in 2018 has had a larger deficit than that same month the previous year.
In addition to not helping the trade deficit, the tariffs seem to be having a negative effect on U.S. exports. Last month, the American Farm Bureau Federation reported that U.S. soybean exports had dropped by 97 percent. Earlier in the year, soybean exports had spiked sharply as overseas buyers tried to beat U.S. tariffs.