Wednesday, February 5, 2020

NYT U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning [feedly]

U.S. Trade Deficit Shrinks, but Not Because Factories Are Returning
https://www.nytimes.com/2020/02/05/business/economy/trump-trade.html

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WASHINGTON — The overall United States trade deficit shrank last year for the first time in six years as the American economy cooled, domestic oil production soared and President Trump waged an aggressive global trade war to rewrite America's trading terms.

The trade deficit for both goods and services fell to $616.8 billion in 2019, down $10.9 billion from the previous year, according to data released by the Commerce Department on Wednesday.

Both imports and exports fell as American factory activity slowed and businesses and consumers felt the impact of tariffs imposed on China, the European Union, Canada, Mexico and other nations. Total American exports dropped $1.5 billion to roughly $2.5 trillion, while imports fell $12.5 billion to $3.1 trillion.

Soaring domestic oil production was a major factor in the shrinking trade deficit, cutting into imports of foreign crude oil by $30.3 billion last year. Exports of civilian aircraft also fell $12.6 billion last year, reflecting the fallout from the deadly crashes of Boeing's 737 Max airplane.

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But the most dramatic changes in global trade flows occurred with China, the target of Mr. Trump's biggest economic offensive.

The trade deficit in goods with China shrank $73.9 billion to $345.6 billion in 2019. It was the first drop on an annual basis since 2016, as both the United States and China placed tariffs on hundreds of billions of dollars of each others' products.

In particular, American imports from China fell sharply in the final two months of the year, as companies worked to avoid tariffs that Mr. Trump has placed on $360 billion worth of Chinese goods and the potential that he could tax nearly everything from China.

Mr. Trump and his advisers have pointed to trends in trade flows as evidence that his trade policies are helping to revive factories and construction sites around the nation.

"This is a blue collar boom," Mr. Trump said in the State of the Union address on Tuesday evening.

But most economists have been skeptical, saying that the country's factory activity weakened last year, and that the trade flows largely reflect a cooling American and global economy.



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