Despite President Donald Trump’s “America First” promises, the United States recorded a $621 billion trade deficit in 2018 — an increase of $68.8 billion from the prior year and the widest since the 2008 financial crisis.
The Commerce Department’s report, which was delayed by the government shutdown, further revealed that the U.S. saw an $891.2 billion merchandise deficit — the biggest in the country’s 243-year history.
The trade deficit measures the difference between a nation’s imported and exported goods and services, showing that the U.S. purchased a great deal more in foreign products than it had sold to countries in Europe, Asia and more.
“This is not a surprise at all,” said Matt Priest, president and CEO of the Footwear Distributors & Retailers of America. “Trade deficits are neither good or bad; they grow and they shrink based on a lot of different factors. Oftentimes for the USA, they grow when the economy is doing well because we have the biggest amount of purchasing power in the world, so we’re buying more stuff and importing more stuff. It’s not bad news. In fact, it’s a reflection of a strong economy.”
Trump has made the reduction in the trade deficit — particularly the country’s bilateral trade relations with China — a focal point of his presidency. The Commerce Department reported that the trade gap with China also reached a record $419.2 billion in 2018, as the leaders of the world’s two largest economies seek a deal to resolve their monthslong tariff dispute.
“The increase shows the problems with starting a trade war. In this case, U.S. importers rushed to bring in more goods before being hit with punitive tariffs, while at the same time U.S. exports crumbled due to closing markets caused by retaliatory tariffs,” explained Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. “The result shows how apparel and footwear companies have been able to adjust their supply chains to remain price competitive during the holiday season. Unfortunately, it also means prices will go up in the coming weeks and months for American families.”
Late this month, Trump is expected to meet with Chinese President Xi Jinping to discuss terms to end the trade war. Within the past year, Washington has imposed duties on $250 billion in Chinese goods, while Beijing has responded with levies on $110 billion in U.S. products. Even with the imposed tariffs — including those that impacted steel and aluminum — the U.S. continues to see its imports overtake exports.
The U.S. is also pursuing new negotiations for a trade agreement with the European Union and Japan.
“I don’t think, from a footwear perspective, we’ll see any dramatic change,” Priest added. “The changes we’re already seeing, such as the shift to Vietnam and elsewhere, were already happening before Trump took office and will continue to happen even after he leaves.”
This story was updated with comments from the AAFA.
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