We learned on Wednesday morning that, in broad strokes, Trump’s effort has been unsuccessful: The trade deficit has climbed during his presidency.
But it is worse for Trump’s rhetoric than it appears.
Overall, the deficit hit $621 billion, the widest since 2008. But that was boosted by a net surplus in trade of services, which helps pull the overall trade balance — a combination of both services and manufactured goods — upward.
If we consider goods alone — precisely the deficit Trump pledged would shrink — we see it has hit its widest margin in decades.
Since the data provided by the Commerce Department goes back only to 1992, this graph obscures the truth: It is the highest in U.S. history.
For a few months after Trump took office, the overall trade balance in goods improved slightly. Since then, however, it has moved downward in fits and starts, while the surplus in traded services has grown more modest.
See that spike in goods at the end of the graph? That was a drop in the trade deficit in manufactured goods that occurred in November. (Since it was a “drop” in the deficit, which moves downward, the line on the graph moves upward.) Trump even bragged about this change, crediting it to tariffs his administration had imposed. We noted last week this argument was incorrect. We learned on Wednesday it was also short-lived.
If we similarly look at the change in the trade balance for various countries since the first quarter of Trump’s presidency, we see how his administration compares with his campaign. In some places, the trade balance has improved (green circles), with the surplus growing or the deficit decreasing. In many, it has gotten worse — including, dramatically, in Mexico and China.
In fact, the most recent quarterly data by country shows the manufactured goods deficits with Mexico and China are at their widest points since 1999. In the third quarter of 2018, the goods balance with China was a deficit of $106 billion. With Mexico, it was about $24 billion.
The problem here is not really with Trump’s administration. The president can have some effect on international trade, but most of it is driven by the massive U.S. economy: Who buys what, from where. The problem was really that Trump made campaign trail promises he would always have had a challenge in fulfilling.