Despite Trump’s Tariffs, US Trade Deficit Increased In October

One of the major aims of United States President Donald Trump imposing import tariffs on multiple products – and heavily on China, was to reduce the trade deficit that the US had with its trading partners. However, according to the latest data, the trade deficit of America with the rest of the world has been rising for five months at a stretch and is well on course to hit record levels by the end of the current year.

According to data from the US Census report there an increase of $1 billion in the month of October for the monthly goods deficit.

Every since the Trump administration imposed the biggest ever round of trade tariffs on Chinese goods worth $200 billion in September, this Census report is amongst the first of the indicators of trade situation that has been officially released. The US has imposed a 10 per cent import tariff on a range of Chinese products ranging from luggage to bikes and baseball gloves and has threatened to increase that tariff to 25 per cent from January 1 next year.

The tariffs have increased the costs of imports for US importers and despite this, more goods were purchased by Americans from foreign countries in the month of October compared to the month earlier. This figure could be indicative of a tendency of stock piling of goods by American importers to store up as much foreign foods as possible before the imposition of the additional tariffs that are set to be imposed starting January next year. However it could also be a case of higher consumer spending on foreign goods.

“There is some anecdotal evidence that US importers are likely pulling forward orders to get ahead of additional tariffs on Chinese goods, which could be one of the factors driving imports higher in recent months,” said Pooja Sriram, an economist at Barclays.

The average American were given more money at hand by the federal tax cuts last year which possibly increased the demand for imports despite the higher prices because of the tariffs.

“We believe that domestic demand is likely to be sufficiently robust so as to keep imports elevated even after any additional tariffs,” Sriram said.

According to Ian Shepherdson, chief economist at Pantheon Macroeconomics, there is a possibility that a 10 year high would be hit for the overall trade deficit for the US after the release of additional trade data that is expected to be released next week for both goods and services.

But this is completely diametrically opposite to what Trump attempted to achieve through the tariffs.

“It’s been such a terrible one-way street with China,” Trump told the Wall Street Journal in an interview Monday.

While there is a general consensus among American businesses and lawmakers that there is need to address China trade issues, however not all agree to the presumption that imposing tariffs on import of Chinese goods is the answer. And there are some who also believe that the tariffs would lead to job losses and higher prices for consumers in the US.

“It would be hard to argue that (China) has behaved fairly in its trade practices,” said Florida Democratic Rep. Stephanie Murphy this week at an S&P Global event in New York.

“But I think doing it in a multilateral way would have been a better approach,” she said.

(Adapted from


Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability, Uncategorized

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