Friday, February 8, 2019

How trade wars are changing the US economy

Data on the US trade balance are the most visible example of the assessment of the Trump administration. It is these figures that make it possible to understand how trade wars with China and other countries are useful for the country's economy.

According to the data for November, the US trade balance deficit decreased by 11.5% and amounted to $ 49.3 billion. Thus, the negative balance fell to its lowest level in the last five months, while in October it was a record since 2008.

In general, these data can be called positive, and Donald Trump can safely show the public the schedule of the trade deficit, which began to turn in the right direction.

On the other hand, the reduction in the deficit occurred against the background of a decline in both exports and imports, which can hardly be called a positive development of events.

Exports from the United States in November decreased by 0.6% from the previous month to $ 209.87 billion. The volume of imports of goods and services fell by 2.9% to $ 259.19 billion.

Apparently, it was possible to reduce the trade deficit mainly due to the reduction in purchases of oil and oil products, and the oil deficit fell to $ 0.6 billion - the lowest level in the entire history of observations.

It is worth noting that the trade deficit with China has also decreased. The figure in November fell by $ 2.8 billion to $ 35.4 billion. Of course, this Trump can also write to the asset, but you need to wait for the publication of more recent statistics, only then it will be possible to draw conclusions.

We add that exports to China fell sharply.

Add that the trade surplus with South and Central America in November was a record ($ 5.4 billion), exports to Japan were also a record ($ 6.9 billion).

Quite recently, China and the United States held a regular round of negotiations, during which China seemed to agree to reduce the imbalance in trade with the United States and begin to actively increase imports of American agricultural products and energy.

However, the position of the Americans is very tough: they demand that China open its market, otherwise, Trump promises to increase duties from April 3.

The outcome of the confrontation is difficult to predict because the Chinese understand how agreement for US demands can turn out for them.

The parties plan to continue high-level talks next week.

US Secretary of the Treasury Stephen Mnuchin, speaking on Wednesday in front of journalists at the White House, confirmed that he and sales representative Robert Lightheiser would go to Beijing "with a big team."

Both sides express a desire to reach an agreement towards the appointed end of the temporary truce in the trade war. If the agreement is not reached by March 2, American duties on Chinese goods worth $ 200 billion will be raised from 10% to 25%.