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Trump tariffs, trade war: trade deficit hits record high,

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President
Donald Trump is failing to meet his goal of shrinking the US
trade deficit with tariffs

Alex
Brandon/AP Images


  • The US goods trade deficit
    increased to $77.2 billion in the month of October — a record
    high.
  • President Donald Trump has made
    reducing the trade deficit a key goal of his policies.
  • But experts say Trump’s tariffs
    can’t reverse an underlying economic trust about the US.

President Donald Trump’s favorite
trade war report card hit its highest level in history last
month.

According to the Census
Bureau
, the US goods trade deficit hit a record high of $77.2
billion in October, up from $76.3 billion the month
before.

While
economists dismiss the deficit
as an inaccurate measure of
the US’s economic competitiveness, Trump has focused on the
number and has made bringing down the deficit one of the key
goals of his
trade policy
.

The reason for October’s bump was
a continuation of
the steady increase in imports
— up 0.1 percentage points
from September — as America’s appetite for foreign goods remained
strong. Exports declined by 0.6 points month-over-month. This was
the fifth-straight month the deficit has widened.

Jake McRobie, a US economist at
Oxford Economics, laid out why the deficit is unlikely to head in
Trump’s desired direction anytime soon.

“Moderating global momentum and
protectionist trade policies will keep weighing on exports in the
near-term, as solid domestic demand and supply constraints keep
imports growth healthy, further widening the deficit,” McRobie
said.

A strong US economy means
Americans still want to buy overseas goods, while a slowing
global economy and Trump’s
tariffs
are slowing US exports. Combine the two, and you’ve
got a recipe for a long-term trend of expanding trade deficits,
according to Ian Shepherdson at Pantheon Macroeconomics.

Tariffs can’t fix the
fundamental problem that the US doesn’t save, net, so it has to
run a
deficit,” he said in a note to clients.
“Fiscal stimulus this year has raised the trend in
the 
deficit.”

The news is unlikely to please
Trump in the run up to the G20 summit in Argentina over the
weekend. The president is scheduled to meet with a roster of
world leaders, including Chinese President Xi Jinping.

The two sides are expected to try
and hash out a deal to end the US-China trade war and eliminate
tariffs on roughly $360 billion worth of goods going between the
two countries. But Trump has recently been making a lot more
noise about tariffs — ranging from cars to more Chinese goods —
so prospects for the meeting are dim.

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