One major goal of President Donald Trump’s trade war with China is to send more US-made products there than Chinese companies export here.
But so far it looks like that plan isn’t working — and it could become politically costly for Trump.
America’s trade deficit with China reached a new high — $34.1 billion — in September. That’s a 13 percent increase compared to last year and is the second-straight record month after a deficit of $31 billion in August.
That takes America’s trade deficit with China for the year to $225.8 billion — about $30 billion more than at the same point in 2017.
This could prove to be a problem for Trump. Over the past year, America has placed about $200 billion worth of tariffs on Chinese goods, in part to make Chinese products more expensive so Americans don’t buy them.
But Beijing has responded to the tariffs in kind, making it much harder for US companies to sell in the Chinese market. China has purposefully increased its exports to the US while, at the same time, it has stopped buying as much from US manufacturers.
While it’s possible that the deficit could shrink in the coming months, right now it doesn’t look good for the president.
“President Trump is on track this year to preside over the new record for the largest trade deficit in the history of US-China relations, beating the record that was set under his watch last year,” Ryan Hass, a China expert at the Brookings Institution, told me.
“Trump chose during the presidential campaign to use the trade deficit as a measure of success, and by that measure, his strategy is failing.”
The trade war is a problem for the global economy
The trade war was supposed to benefit America. That’s not really happening.
Here’s just one example: Ford, America’s second-largest car company, said last month that it lost $1 billion due to Trump’s tariffs and now expects massive layoffs. That’s politically troublesome for the president, since he has said time and time again that his priority is to grow manufacturing jobs.
But the spat also hurts China. The International Monetary Fund (IMF), a world body that helps keep the global economy stable, announced on Friday that the trade war could curb China’s economic growth by about 2 percent over the next two years. If true, it would be a major blow to China’s economy, which prioritizes continued growth above all else.
China will almost certainly inject its own money into the local economy as part of a stimulus program, the IMF noted, which could negate the decline in growth.
Still, it looks like the trade war will hurt more than just Beijing and Washington.
On Tuesday, the IMF released a major report that projected the world’s economy will grow by 3.7 percent, which is 0.2 points lower than they had estimated in April. That’s the same rate of growth as 2017, signaling a slight slowdown — and Trump’s trade policies are a major reason why.
“[T]he forecast for 2019 has been revised down due to recently announced trade measures, including the tariffs imposed on $200 billion of US imports from China,” the IMF’s “World Economic Outlook” report concluded.
To recap: The trade deficit with China keeps growing, the US is losing jobs because of the trade war, and for now it looks like Beijing might weather the storm.
There’s very little winning here for America.