WASHINGTON, D.C. (Texas Insider Report) — After President Donald Trump campaigned on the promise to reduce America’s massive and persistent trade deficits – saying it was a sign of economic weakness and the result of lopsided trade deals that put U.S. exporters at a disadvantage – the Commerce Department said Wednesday the U.S. Trade Deficit fell for the first time in six years during 2019 as President Trump hammered China with import tarrifs and taxes.
The Commerce Department announced that the gap between what the United States sells and what it buys abroad fell 1.7% last year to $616.8 billion. While U.S. exports fell 0.1 % to $2.5 trillion, imports fell more, slipping 0.4% to $3.1 trillion.
- Overall, the United States posted a $866 billion deficit in the trade of goods such as cars and appliances, down from $887.3 billion in 2018.
- But it ran a $249.2 billion surplus in the trade of services such as tourism and banking, down from $260 billion in 2018.
- Imports of Crude Oil plunged 19.3%, to $126.6 billion.
- At $17.1 billion, petroleum exports in December were the highest on record.
And the world’s two biggest economies, the U.S. and China, reached an interim trade deal last month after Trump announced he would drop a planned extension of tariffs to another $160 billion worth of Chinese goods. Tensions in the 19-month U.S.-China trade war have eased after Washington and Beijing signed a Phase 1 trade deal in January.
The deficit in the trade of goods with China narrowed last year by 17.6% to $345.6 billion. President Trump imposed tariffs on $360 billion worth of Chinese imports in a battle over Beijing’s aggressive drive to challenge American technological dominance.
But goods trade gap with Mexico rose 26.2% last year, to a record $101.8 billion.
The White House has also sparred with other trading partners, including the European Union, Brazil and Argentina, accusing them of devaluing their currencies at the expense of U.S. manufacturers.
The goods deficit with the European Union also hit a record, $177.9 billion – up 5.5% from 2018.
Mainstream economists argue that trade deficits are largely the result of a big economic reality that doesn’t respond much to changes in trade policy: Americans spend more than they produce, and imports fill the gap.
Data for November 2019 was revised by the Commerce Department to show the trade gap tightening to $43.7 billion, instead of $43.1 billion as previously reported.
In December, the overall trade gap widened 11.9% to $48.9 billion, as exports rose 0.8% to $209.6 billion. Imports increased 2.7% to $258.5 billion.