Trump’s Trade War Backfires With Record China Trade Deficit

In August, China’s trade surplus with the United States grew to a new record which is sure to “add fuel to the trade war fire.”

Customs data released over the weekend showed that the U.S. trade deficit with China was a record $31.05 billion in August, an increase from $28.09 billion in July, and exceeding the previous record which was set in June of this year.

If Trump’s goal is to even the trade score with China, he is failing. Over the first eight months of 2018 China’s surplus with the United States rose almost 15 percent. This shows that his misguided trade war isn’t working, but is backfiring spectacularly.

And that is not all of the bad news which is sure to upset American President Trump and increase tensions between the two largest economies in the world.

The U.S. trade office also reported a slow down in U.S. exports, as China’s imports from the United States grew just 2.7 percent in August, down from 11.1 percent growth in July.

Most observers believe that these new trade numbers will cause Trump to act even more aggressively toward China, and seek to add more tariffs on Chinese imports. Economists believe such moves will not work to lessen the U.S.-China trade deficit but will increase costs to Americans and also lead to the loss of good-paying jobs.

Even as Trump imposed new tariffs on $50 billion of Chinese exports to the United States in August, China’s exports to the U.S. still increased, growing 13.2 percent from the previous year.

Zhang Yi, an economist at Zhonghai Shengrong Capital Management, said, “There is still an impact from front-loading of exports, but the main reason (for still-solid export growth) is strong growth in the U.S. economy.”

Zhang said the impact from U.S. tariffs on China’s exports would likely be limited.

Meanwhile, Donald Trump continues to take a tough stance against China even though it is having no real impact. Many people think he is talking tough on trade to follow through on unreasonable promises made during his presidential campaign in 2016.

Recently, as the president has engaged in belligerent, anti-China rhetoric, the stock markets have gotten nervous at the prospect of Trump imposing more tariffs on Chinese imports.