Realist, not conformist analysis of the latest financial, business and political news

We Do Have Proof Trump’s Trade Policies Aren’t Working

If you were a mercantilist – if you were wrong but I repeat myself – then you would be thinking that throwing up tariff barriers to imports would perhaps reduce the trade deficit. You would, if you thought that, be wrong. At least you would in a world where other people can also play silly games about trade at the same time.

The problem with Trump’s trade war thing is not only that he’s wrong. The whole point of trade is to have those imports, cutting ourselves off from them is just silly. But even if you don’t get that, even if you are the mercantilist – you know, wrong – the trade war still isn’t working. Because the deficit is widening:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Given that the US has been merrily imposing tariffs on Chinese imports we’d rather expect the deficit to fall. But that China has been imposing tariffs on American exports we might expect that to fall. What happens to the deficit being the balance of the two effects? Given that we buy more from them than they us we’d expect the effect being to narrow that deficit. It isn’t. Ooops.

Advance International Trade in Goods The international trade deficit was $72.1 billion in April, up $0.2 billion from $71.9 billion in March. Exports of goods for April were $134.6 billion, $5.9 billion less than March exports. Imports of goods for April were $206.7 billion, $5.6 billion less than March imports.

We’re just seeing less trade going on, that’s not good. [/perfectpullquote]

When a policy, even if it’s wrong, doesn’t even work by your own incorrect standards perhaps it’s about time for that rethink.

BTW, if you sign up for this, dependent upon how it’s all treated in the trade stats, that might reduce the US trade deficit. Or increase it :

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