President Donald Trump often brags about real and perceived records set during his presidency, but according to his Commerce Department, the U.S. set a record last year that likely will not find its way into any campaign rally mentions.
In 2018, the U.S. “posted a $891.2 billion merchandise trade deficit, the largest in the nation’s 243-year history,” The Washington Post reported on Wednesday — despite Trump’s “America First” trade policies.
Last year marked the third consecutive year that America’s trade deficit has risen.
And the country’s trade gap with China also hit a record high at $419 billion, the department said, as Washington and Beijing continue negotiations that could potentially conclude with a deal this month.
According to the Post, the previous record was $838.3 billion in 2006 as the housing bubble was hitting its peak.
In the service sector, which generally helps offset gaps in the trade of goods, the U.S. logged a $621 billion deficit in 2018 — which “reflected a deterioration of more than $100 billion from the figure Trump inherited from president Barack Obama.”
Why are Trump’s “America First” policies failing to work?
“Macroeconomics end up ruling. You can’t wish it away. You can’t tariff it away,” William Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies, told the Post.
An array of economic forces are exacerbating the trade deficit, according to economist, including Trump’s signature legislative accomplishment: the $1.5 trillion corporate and personal income tax cuts package.
“As cash-flush businesses and consumers increased their spending, purchases of imported goods rose,” the Post wrote, “while the overvalued dollar weighed on exports.”
The best bet for shrinking America’s trade deficit is not tariffs, or even a solid trade deal with China, according to experts.
“If you want to lower the trade deficit, have a recession,” Reinsch said.
During the Great Recession, the U.S. trade deficit dropped 40 percent from its peak to about $506 billion, the Post said. But no one wishes for a recession.
Despite his 2016 campaign promise that “We can turn it all around — and we can turn it around fast,” Trump has made no real progress on reducing America’s trade deficit.