Wasn’t former President Donald Trump and his protectionist agenda supposed to eliminate the trade deficit?
Well, that did not happen.
According to the Department of Commerce, the U.S. trade gap advanced 17.7 percent in 2020 to $679 billion, the highest level since 2008. This is also up from $577 billion in 2019.
Exports plummeted 15.7 percent to $2.1 trillion, while imports plunged 9.5 percent to $2.8 trillion.
The U.S. also ran a $237 billion surplus in services, but it posted a $916 billion shortfall in trade in goods.
In the final full month of the Trump administration, the trade deficit tumbled $66.6 billion, with exports rising 3.4 percent and imports jumping 1.5 percent.
Now, this isn’t necessarily a bad thing. Trade deficits are not terrible like the budget deficit.
As the great Murray Rothbard noted:
The alleged “deficit” was paid for by foreigners investing the equivalent amount of money in American dollars: in real estate, capital goods, US securities, and bank accounts.
In effect, in the last couple of years, foreigners have been investing enough of their own funds in dollars to keep the dollar high, enabling us to purchase cheap imports. Instead of worrying and complaining about this development, we should rejoice that foreign investors are willing to finance our cheap imports.
But the previous president was all about slashing the trade deficit. No such luck.
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