US trade deficits hit record high following Trump tariff wars

The U.S. trade deficit, both globally and specifically with China, hit record highs during 2018. President Donald Trump has said that one of the main reasons he had put steep tariffs in place was to combat the trade deficit.

What does the data say?

According to the U.S. Census Bureau, the total U.S. trade deficit with China hit $419 billion during 2018, an increase of $43.6 billion over 2017.

With the exception of February 2017, every month of the Trump presidency has seen an increase in the trade deficit compared to the same month in the previous year. In December, for example, the trade deficit with China jumped from $31 billion in 2017 to $37 billion in 2018.

2018 was the first year since 2007 in which not a single month had a smaller trade deficit with China than the same month in the year prior.

Globally, the trade deficit jumped from $796 billion to $870 billion between 2017 and 2018, an increase of $74 billion.

Data for 2019 is not yet available. Data from December 2018 was released Wednesday.

What is a trade deficit?

A trade deficit occurs when a nation's imports exceed its exports. Economists disagree about whether or not such a deficit is good or bad, since more importing could be an indicator of a healthy economy and consumers with more disposable income.

Between 2017 and 2018, U.S. exports to China dropped by more than $9 billion, while its imports from China rose by more than $34 billion.

Some of this is likely due to the ongoing trade war between the U.S. and China. After the U.S. imposed tariffs on global imports of steel and aluminum, China slapped retaliatory tariffs on a number of American goods. The U.S. responded with additional tariffs of its own, and China responded in kind. This led to U.S. exports of soybeans to drop off by 97 percent during the first seven weeks of the 2018-19 marketing year, compared to what they had been the year before.

U.S. exports of sorghum to China, typically a $1 billion a year industry, also dropped after China imposed a 179 percent retaliatory tariff on U.S. imports of the product.

What did Trump say?

Trump has made the trade deficit a focus of his economic foreign policy and frequently mentions it when discussing international trade.

During his recent speech at CPAC, the president said "And now, last year, we had almost a $500 billion trade deficit with China. We can't have that. We can't have that. I have great respect for President Xi, but we can't have that. We have to do what we have to do."

The $500 billion number could be a reference to the total number of all imports from China last year, which added up to $505 billion.