WASHINGTON—The U.S. posted its widest monthly trade gap since 2008 in December and a record annual deficit in goods as sturdy economic growth underpinned higher spending by American consumers and businesses.
.. Over the course of 2018, Mr. Trump imposed tariffs on a range of goods that the U.S. imports from other countries, particularly China, in hopes of giving American producers a competitive edge. He publicly lambasted companies that outsourced jobs, renegotiated pacts with major U.S. trade partners like Mexico, Canada and South Korea, and rankled longtime European allies by deeming their steel and aluminum exports a threat to national security.
Still, the trade gap swelled 12% from 2017 to $621 billion. Excluding services that the U.S. sells to foreigners, such as tourism, intellectual property and banking, the deficit grew 10% to $891.3 billion, the largest level on record.
Economists say the shortfall was fueled, ironically, by another Trump administration policy: tax cuts and spending increases that juiced demand from U.S. consumers and businesses at a time when growth in the rest of the world was slowing. Concern that the U.S. economy could overheat prompted the Federal Reserve to raise interest rates four times in 2018, contributing to a strong dollar in the second half of the year that made foreign goods relatively cheap for Americans
As a result, U.S. imports grew 7.5%, while exports increased just 6.3%.
“Higher take-home incomes for households have definitely proven to be very conducive to imports,” said Pooja Sriram, an economist at Barclays. “The outcome has been in almost the opposite direction of what the administration has wanted.”
U.S. imports of consumer goods last year jumped 7.7% to $647.9 billion, fueled in part by a 22% rise in inbound shipments of drugs. Industrial supplies like fuel and crude oil were another driver of the trade gap, with imports rising 13% from 2017 to $575.7 billion.
Highlighting the limitations of Mr. Trump’s trade policies, the goods deficit widened most with China, the U.S.’s largest commercial partner and the main focus of White House efforts. That is partly because Chinese authorities responded to tariffs by drastically scaling back their country’s purchases of key U.S. exports like soybeans, cars and metals, production of which is concentrated in states that Mr. Trump won in the 2016 election.
U.S. goods exports to China fell 7.4% in 2018 to $120.3 billion, while imports from China grew 6.7% to $539.5 billion as Americans increased their purchases of electronics, furniture, toys and other products... But deficits do subtract from gross domestic product, and the widening of the trade shortfall at the end of 2018 was a factor in slower U.S. growth in the fourth quarter... “Trade now looks set to be a more serious drag in the first quarter,” Mr. Hunter said in a note to clients. He estimates annualized GDP growth will slow to just 1.5% in the first three months of 2019, down from 2.6% in the fourth quarter.
As he so often does, President Trump falsely declared on “60 Minutes” that North Korea and the United States were going to war before he stepped in to thwart it.
Interviewer Lesley Stahl was having none of it. “We were going to war?”
Trump immediately retreated to safer ground, expressing a view rather than trying to assert a fact: “I think it was going to end up in war,” he said, before moving on to his “impression” of the situation.
The 26-minute interview that aired Oct. 14 was typical Trump — bobbing and weaving through a litany of false claims, misleading assertions and exaggerated facts. Trump again demonstrated what The Fact Checker has long documented: His rhetoric is fundamentally based on making statements that are not true, and he will be as deceptive as his audience will allow.
.. Trump resorting to all of his favored moves to sidestep the truth.
.. On Stahl’s first question, about whether Trump still thinks climate change is a hoax, the president dodged by saying “something’s happening.” He then completely reversed course and declared that climate change is not a hoax and that “I’m not denying climate change.”
.. Trump also falsely said the climate will change back again, even though the National Climate Assessment approved by his White House last year said that there was no turning back. He said he did not know whether climate change was man-made, though the same report said “there is no convincing alternative” posed by the evidence.
.. Trump did his usual shrug when asked whether North Korea is building more nuclear missiles. “Well, nobody really knows. I mean, people are saying that.” Among the people who are saying that are U.S. intelligence agencies, who have concluded that North Korea does not intend to fully surrender its nuclear stockpile and is instead working to conceal its weapons and production facilities.
.. Even when he adjusts his rhetoric, at times contradicting what he has just said, Trump almost always appears to believe firmly in what he is saying.
.. On trade, the president continues to suggest that deficits mean the United States is losing money: “I told President Xi we cannot continue to have China take $500 billion a year out of the United States.”
That’s wrong. The trade deficit just means Americans are buying more Chinese products than the Chinese are buying from the United States, not that the Chinese are somehow stealing U.S. money.
.. Trump also continues to misstate the trade deficit with China. It’s not $500 billion, as he told Stahl; it was $335 billion in 2017
.. Curiously, he denied to Stahl that he ever said he was engaged in a trade war with China, even though he has said and tweeted it many times, including on Fox News last week.
.. He also falsely said that “the European Union was formed in order to take advantage of us on trade.” That’s a misreading of history, at best. The E.U. got its start shortly after World War II as the European Coal and Steel Community — an early effort to bind together bitter enemies such as Germany and France in a common economic space to promote peace.
.. Trump surfaced another old favorite knock on U.S. allies — “we shouldn’t be paying almost the entire cost of NATO to protect Europe.” Actually, the United States pays 22 percent of NATO’s common fund. Trump keeps counting U.S. defense spending devoted to patrolling the Pacific Ocean and other parts of the world as part of NATO funding.
When it was pointed out that Defense Secretary Jim Mattis, a former general who served in the military for 44 years, says he believes NATO had kept the peace for 70 years, Trump sniffed, “I think I know more about it than he does.”
.. Questioned about Russian interference in the 2016 election, Trump conceded that “they meddled.” But he added, “I think China meddled, too.” When Stahl said he was “diverting the whole Russia thing,” Trump insisted he was not. “I’m not doing anything,” he demurred. “I’m saying Russia, but I’m also saying China.”
There is no evidence China engaged in the same disinformation effort as Russia, which intelligence agencies have said was designed to swing the election toward Trump.
.. Finally, Trump continued his habit of mischaracterizing what his predecessor did. He claimed that Barack Obama “gave away” the Crimea region of Ukraine, when actually Russia seized it and Obama then led an effort to impose sanctions in response.
.. In one of the testier back-and-forths, Trump tried to shut down Stahl with one line that was indisputably true: “I’m president,” he said, “and you’re not.”