Despite Trump's efforts to shrink the trade deficit, it keeps rising — and that may be bad news beyond the U. S.
President Donald Trump and his economic advisers focus on trade deficits when it comes to China, and Mr. Trump has said a trade war would be “easy to win.” But trade relationships — and their impacts — are far more complex.
Chinese data released overnight show the trade gap between the world’s two largest economies was at a record high in 2018, and it may signal a broader global economic slowdown, according to economists. An alarming point in the latest Chinese trade data was a slowdown in the country’s exports in December, shrinking by 4.5 percent to $221.2 billion, while imports declined 7.2 percent to $164.2 billion.
That led global stock markets to slide in Monday trading as fears mounted that global growth is slowing. In the U. S., the S&P 500 lost 0.5 percent, and the Dow industrials fell 0.4 percent.
Here’s a rundown on what the latest numbers show.
China’s 2018 trade surplus with the U. S. surged to a record $323.3 billion. That means the U. S. purchased that much more in goods and services from China than it shipped to the country.
Mr. Trump’s trade war with Beijing may be starting to take a toll both at home and in China, even though the White House is holding back on additional tariff measures until March while the two sides try to negotiate a trade deal. U. S. and Chinese officials ended a three-day negotiating session last week with no sign of agreements or word on what their next step would be.
But penalties of up to 25 percent already imposed on billions of dollars of each other’s goods remain in place, raising the cost for American and Chinese buyers of soybeans, medical equipment and consumer goods, from purses and bicycles to furniture and tech gear.
Tariffs are taxes paid by companies, not countries, to import goods and services. Yet tariffs are just one of the many factors in China’s slowing growth, economists at Capital Economics wrote in a note to clients. They estimate a cooler Chinese economy could cut about 0.2 percentage points off global GDP in 2019 compared to the 2018 pace. Other experts have pointed to a potential hit to the U. S. economy from the current partial government shutdown.
