Trump’s trade war with China is definitely not going as planned

The trade deficit between the United States and China has grown since the president imposed tariffs on Chinese imports.

President Donald Trump at the Oval Office of the White House on September 5, 2018 in Washington, DC. CREDIT: Alex Edelman/Getty Images.
President Donald Trump at the Oval Office of the White House on September 5, 2018 in Washington, DC. CREDIT: Alex Edelman/Getty Images.

President Donald Trump is a long way from winning his war on the trade deficit he has been railing against since his days as a candidate.

And, if the latest data released by the U.S. Commerce Department is any indication, things are on track to get worse for the foreseeable future, although he certainly seems rather optimistic at this point:

With $50 billion in tariffs now imposed by the U.S. on Chinese imports (and China responding in kind), and another $200 billion in the wings, the U.S. trade deficit grew for the second month in a row, hitting a five-month high, and widening the trade deficit with China by the greatest leap in three years.


In June, the deficit — the difference between what Americans buy from other countries versus what they sell to them — grew from $45.7 billion to $50.1 billion in July. That’s an almost 10 percent increase, bringing the United States to a total trade deficit of $337 billion in July — the highest in a decade.

The Associated Press reports that the deficits in trade with China and the European Union (also the target of President Trump’s tariffs) set records. The United States is also engaged in tense trade negotiations with Canada and Mexico over the North American Free Trade Agreement.

American businesses are in a panic over what an escalated trade war with China will do not only to consumer costs (which will affect their bottom line) but to the odds of their survival, period.

And companies have been lining up to get their goods off the tariff list using a comment period that closed on Thursday. Some 4,000 comments were sent to U.S. trade representative Robert Lighthizer, and some of those businesses got the chance to make their case in person before several days of hearings that, according to Quartz, produced nearly 500 pages of transcripts each day.


While the U.S.-China trade deficit has long been an issue, some experts don’t think that tariffs are the way forward. As the AP reports, the real culprit might be American spending habits:

Mainstream economists blame persistent U.S. trade deficits on an economic reality that can’t be changed much by trade policy: Americans spend more than they produce, and imports fill the gap. The strong U.S. economy is also encouraging Americans to buy more foreign products.

Economist Stephen Roach told CNBC that tariffs won’t fix U.S. trade deficits, which, he pointed out, exist in bilateral trade between the United States and 102 countries.

“The tariff war is really a foil,” said Roach, adding that deficits are a “multilateral problem” caused in large part by the fact that Americans do not save enough money.

But with the comment period over, the new tariffs — to which China has vowed to respond with similar measurescould hit at any moment.

UPDATE: Aboard Air Force One on Friday, Trump told reporters that he is ready to impose tariffs on $267 billion worth of Chinese products. He clarified that this is in addition to the $200 billion worth of tariffs that “could take place very soon.


The $517 billion total — taking into account the tariffs on $50 billion in Chinese products already imposed — is greater than the total sum of Chinese imports in the United States last year.