According to a recently released report by the US Government, in the first half of 2018, the US trade deficit (with both goods and services) increased to 291.2 billion USD – higher than the same period last year. With this momentum, the above report predicts that the US trade deficit this year will increase to the highest level since 2008.
President Trump has repeatedly pledged to reduce the trade deficit, but reality is working against his efforts. He said that the US’s large trade deficit is a sign that the country is being “attacked” by China, Germany and many other countries and considered this trade deficit to be the result of “very stupid”.
Meanwhile, most economists do not see the trade deficit as a problem. They pointed out that the main cause of this year’s increased trade deficit is Americans buying more goods due to improved economic growth and recent domestic tax cuts.
Arguing that the trade deficit is the result of unfair trade practices, President Donald Trump has been putting pressure on key trading partners by imposing high taxes on imported goods.
Mr. Trump sees trade as a “zero-sum game”: when one country benefits, it causes damage to the other. With the comment that it is “easy to win” in trade wars, President Donald Trump launched this war with a series of countries to pressure the leaders of those countries to sit at the negotiating table.
Most recently, Mr. Donald Trump threatened to hit trade more severely by continuing to impose a 25% tax on imports from China worth 216 billion USD.
Despite the increase, the US trade deficit is still below 3% of GDP, down sharply from 5% in the period before the financial crisis.
According to US experts, President Donald Trump’s tax on imports from China and other countries will not necessarily reduce the trade deficit because Americans still need to buy all products. are taxed, so companies will either have to import the product at a higher price, or import that product from countries that do not have additional taxes.
