US Trade Deficit Widens Despite Tariffs. Don’t Blame Trump, Blame Yourselves

According to newly released data, which was delayed by the government shutdown, it will be concluded that Donald Trump has so far failed to reduce the trade deficit he promised to cut. All this amid a ballooning debt after tax cuts. There is one overwhelming reason for this, and it is not Trump’s fault. Instead, it is the people of the United States who continue to fail to support US manufacturers.

Decades of an addiction to a lower cost of living brought about by China mass-producing everyday items have left US consumers reluctant to pay more for similar quality purely in the interest of patriotism. Most people are patriots in public, standing at the national anthem but when it comes to their purse, they draw the line. The vultures are naturally now circling over Trump’s bold claims in the past.

Trump is helpless as he fights against the American addiction to foreign goods | Source: Fred Dufour / AFP

Chinese Wages are Still so Low, Ethical American Manufacturers Can’t Compete

The problem for US manufacturers is they got caught out first by being in a nation with high ethical standards for workers. Nike looked over at China at all the poverty and sheer scale of the human resources and thought “we can pay these people practically nothing and charge the same prices.” China’s minimum wage is still less than 4$. Ultimately this is what happened as the hard-working, and industrious people of China put International US retailers on their backs. If you made shoes in the US, you couldn’t compete paying $10 an hour when they were spending so much less in Asia.

Democrats and Republicans United in Their Hypocrisy on Trade

Surprisingly, Democrats have pounced on tariffs, a surprising move given how badly they need to rebuild the blue wall in Michigan. Tariffs are also a common communist/socialist tactic, so the lack of fight from Republican’s is also noteworthy. A trade deficit is fine for a globalist, it just depends on who you serve politically.

Next, throw in the mix that China is developing and modernizing. The quality of the products is now increasing. The costs may be rising, but the end-product is improving faster than the expenses. This means that other more skilled US-industries are increasingly at risk. The vast majority in the US (which is a consumer driven economy) benefited from these cheaper costs. There was, therefore, no one to stand up for the USA’s factories. As they had to cut quality to cut costs, jokes emerged about how bad the quality of US goods emerged. The fact it was true helped even less.

Consumers Want Cheap Stuff Not American Made

So here we are in the present day.  We have a President who realized he could harness the power of the disenfranchised US manufacturing industry (“Make America Great Again”) to get elected. He promised to strong-man it back to global prominence. There was one fatal flaw to this plan. While it was enough to win an election, not enough people care enough. For most American’s cost of living is the primary concern and they will buy clothes at Target made in China because they are $10 cheaper than the US-made equivalent. Period. Chinese saturation has allowed for a burgeoning luxury market in US goods, but the mainstream mass producers are still out in the cold.

Just look at the data.

Despite Trump imposing billions of dollar’s of tariffs to negate the cost of production,  people still want foreign goods. His plan is failing catastrophically and this is not anyone’s fault but free-market appetite and a fight against a deflationary mindset in the consumer amid a long period of struggling wage growth and retail habits.

Blame President Trump for whatever you like, the lying, the affairs, Russia, The Shutdown, The Wall etc. But don’t say he didn’t try to help US manufacturing and the trade deficit. He did. The American people rejected the ideology.

Last modified: March 4, 2021 3:18 PM

Francois Aure

Financial speculator & author living in the hills in Los Angeles. J.D. but very much not a lawyer. Favorite trading books are anything written by Jack Schwager. | Follow Me On Twitter | Email Me