6 4 5RADE%EFICIT-AST:EAR8AS 8IDEST4INCE · 2017-02-09 · This copy is for your personal,...
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2/9/2017 U.S. Trade Deficit Last Year Was Widest Since 2012 WSJ https://www.wsj.com/articles/ustradedeficitnarrowedindecembertotaled50225billionin20161486474624?emailToken=JRrzcPp8Z32VitQ9bcwhkUZtc… 1/3 The U.S. logged a $502.25 billion trade deficit in 2016, the largest in four years and a gap President Donald Trump is setting out to narrow to bolster the U.S. economy. The new president faces obstacles in the coming months and years, including the potential for a stronger dollar, larger federal budget deficits and low national saving rates compared with much of the rest of the world, all of which could force trade deficits to widen. As in past years, the 2016 gap reported Tuesday by the Commerce Department reflected a large deficit for U.S. trade in goods with other countries, offset in part by a trade surplus for services. The gap in terms of goods only was $347 billion with China last year, $69 billion with Japan, $65 billion with Germany and $63 billion with Mexico. For December, the total trade gap decreased 3.2% from November to a seasonally adjusted $44.26 billion. Exports rose 2.7%, including increased sales of civilian airplanes and aircraft engines. Imports were up 1.5% in December, including a rise in car imports. During the presidential campaign, Mr. Trump and some of his economic advisers said he would seek to boost economic growth and support U.S. manufacturing jobs by reducing the nation’s trade deficit and thus increasing net exports. He said his administration will negotiate better deals with other countries, and he has also threatened to levy tariffs on some imports. “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs,” Mr. Trump said in his Jan. 20 inaugural address. “Protection will lead to great prosperity and strength.” The interplay between trade, growth and employment is complex and difficult to This copy is for your personal, noncommercial use only. To order presentationready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com. https://www.wsj.com/articles/ustradedeficitnarrowedindecembertotaled50225billionin20161486474624 ECONOMIC DATA President Trump is setting out to narrow the gap in an effort to bolster the economy A container is unloaded from a cargo ship at the Port of Long Beach in Long Beach, Calif., on Sept. 15, 2016. PHOTO: TIM RUE/BLOOMBERG NEWS Updated Feb. 7, 2017 2:37 p.m. ET By BEN LEUBSDORF
Transcript of 6 4 5RADE%EFICIT-AST:EAR8AS 8IDEST4INCE · 2017-02-09 · This copy is for your personal,...
2/9/2017 U.S. Trade Deficit Last Year Was Widest Since 2012 WSJ
https://www.wsj.com/articles/ustradedeficitnarrowedindecembertotaled50225billionin20161486474624?emailToken=JRrzcPp8Z32VitQ9bcwhkUZtc… 1/3
The U.S. logged a $502.25 billion trade deficit in 2016, the largest in four years and a gapPresident Donald Trump is setting out to narrow to bolster the U.S. economy.
The new president faces obstacles in the coming months and years, including thepotential for a stronger dollar, larger federal budget deficits and low national savingrates compared with much of the rest of the world, all of which could force trade deficitsto widen.
As in past years, the 2016 gap reported Tuesday by the Commerce Department reflecteda large deficit for U.S. trade in goods with other countries, offset in part by a tradesurplus for services. The gap in terms of goods only was $347 billion with China lastyear, $69 billion with Japan, $65 billion with Germany and $63 billion with Mexico.
For December, the total trade gap decreased 3.2% from November to a seasonallyadjusted $44.26 billion. Exports rose 2.7%, including increased sales of civilian airplanesand aircraft engines. Imports were up 1.5% in December, including a rise in car imports.
During the presidential campaign, Mr. Trump and some of his economic advisers said hewould seek to boost economic growth and support U.S. manufacturing jobs by reducingthe nation’s trade deficit and thus increasing net exports. He said his administration willnegotiate better deals with other countries, and he has also threatened to levy tariffs onsome imports.
“We must protect our borders from the ravages of other countries making our products,stealing our companies and destroying our jobs,” Mr. Trump said in his Jan. 20 inauguraladdress. “Protection will lead to great prosperity and strength.”
The interplay between trade, growth and employment is complex and difficult to
This copy is for your personal, noncommercial use only. To order presentationready copies for distribution to your colleagues, clients or customers visithttp://www.djreprints.com.
https://www.wsj.com/articles/ustradedeficitnarrowedindecembertotaled50225billionin20161486474624
ECONOMIC DATA
U.S. Trade Deficit Last Year WasWidest Since 2012President Trump is setting out to narrow the gap in an effort to bolster the economy
A container is unloaded from a cargo ship at the Port of Long Beach in Long Beach, Calif., on Sept. 15, 2016. PHOTO: TIMRUE/BLOOMBERG NEWS
Updated Feb. 7, 2017 2:37 p.m. ETBy BEN LEUBSDORF
2/9/2017 U.S. Trade Deficit Last Year Was Widest Since 2012 WSJ
https://www.wsj.com/articles/ustradedeficitnarrowedindecembertotaled50225billionin20161486474624?emailToken=JRrzcPp8Z32VitQ9bcwhkUZtc… 2/3
manage. The U.S. has run trade deficits for decades, during periods of expansion and lowunemployment as well as during recessions and high unemployment.
The gap widened starting in the late 1990s with China’s emergence as a world tradingpower and recent research shows a surge of imports from China put downward pressureon U.S. wages and manufacturing employment. Economists generally say trade hasoverall if uneven benefits, including lower prices for consumers.
In 2016, the total deficit rose modestly from the prior year to its highest dollar levelsince 2012. But it shrank slightly to 2.7% as a share of U.S. economic output afterhovering at 2.8% of gross domestic product in 2013 through 2015.
The gap fundamentally reflects the fact that Americans consume more than theyproduce relative to the rest of the world. To shrink the gap, they would either have toproduce more or consume less.
If Americans consumed less, the deficit could contract along with the broader economy,as happened during the 2001 and 2007-2009 recessions, leaving workers no better off.To produce more, U.S. firms could export more or take market share from imports.Tariffs could help that happen, but other countries might retaliate.
Former President BarackObama, in a bid to boosteconomic growth, in 2010 setout to double the nation’sexports in five years. But hefell well short of that goal duein part to shaky demandoverseas and a stronger dollar.
The dollar’s rise since Mr.Trump’s election couldpresent a headwind for exportdemand because it makes U.S.goods and services moreexpensive overseas. The U.S.currency has appreciated 23%since July 2014 and by 2%since Mr. Trump’s election,
according to Federal Reserve data.
Checking the BalanceU.S. trade balance, annual
THE WALL STREET JOURNALSource: Commerce Department
billion
1996 ’98 2000 ’02 ’04 ’06 ’08 ’10 ’12 ’14 ’16-800
-600
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$0
2/9/2017 U.S. Trade Deficit Last Year Was Widest Since 2012 WSJ
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Moreover, the new president’s stated desire to cut taxes and increase governmentspending could expand the federal budget deficit, a phenomenon that in the past hasbeen accompanied by a wider trade gap.
“We may be now seeing a return of the ‘twin deficits’ that we saw in the 1980s and the2000s,” said Harvard University economist Jeffrey Frankel, a former member of theWhite House Council of Economic Advisers under President Bill Clinton.
There is “tension” between Mr. Trump’s goals on fiscalpolicy and trade, said Matthew Slaughter, dean of theTuck School of Business at Dartmouth College and aformer White House economic adviser to PresidentGeorge W. Bush. “The desire for fiscal expansion…will
tend to increase the trade deficit’s overall size, not reduce it,” he said.
There is much uncertainty about how efforts on Capitol Hill to craft a tax-code overhaulcould affect trade, as well as what actions the Trump administration might pursue ontrade agreements and tariffs in the coming months.
“If there is some type of tax effort or reform put out that has an advantage relative toexports, we’ll more than likely get a significant tailwind from that,” Raytheon Co. ChiefExecutive Tom Kennedy told analysts in late January.
But “you have to be worried about a trade war,” Honeywell International Inc. ChiefExecutive David Cote told analysts last month. “If it gets to that point, it’s not going to bebad just for trade, but it’s going to be bad economically.”
Write to Ben Leubsdorf at [email protected]
Copyright ©2017 Dow Jones & Company, Inc. All Rights Reserved
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