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Trump’s Trade Fallacies

In tomorrow’s (the October 8th, 2019 edition of the) New York Times, my intrepid Mercatus Center colleague Veronique de Rugy explains that each of five claims that Trump made about trade is hogwash. A slice:

During his campaign, Mr. Trump said that he would wipe away the trade deficit. Aside from the fact that this is a foolish goal, his trade disputes have achieved quite the opposite. As my colleague Daniel Griswold documents, “During President Obama’s second term in office, from 2013 through 2016, the monthly trade deficit in goods and services averaged $40.7 billion; under President Trump the monthly deficit has averaged $50.1 billion.”

A reduction in the bilateral trade deficit is a meaningless measure of success because when one deficit goes down, many others go up. Case in point: The deficit with China is going down, but it has been more than offset by rising bilateral deficits elsewhere, including with Vietnam and Mexico. Imports from China are also down 12 percent, but exports to China are down 19 percent. So even by the president’s own mercantilist standard, he is failing.

The bottom line is that pretty much everything Mr. Trump has promised on the trade front by imposing tariffs hasn’t panned out, even if the president persists in saying the opposite.