Lighthizer blames COVID-19 for record-high trade deficit

-The Hagstrom Report

The Commerce Department today released statistics showing that the monthly U.S. trade deficit hit a record high in August, but Trade Representative Robert Lighthizer said the coronavirus pandemic, not the Trump administration’s policies, were to blame.

“The trade data released today reflect the effects of the coronavirus on the U.S. and our trading partners,” Lighthizer said in a statement. “Basically, many of our partners were more negatively affected by the pandemic than we were. Indeed, the U.S. economy has outperformed every other G7 country. In spite of the pandemic, our goods deficit is down 2.4% year-to-date. The goods deficit would have decreased by at least 6% but for a large spike in gold imports reflecting risk-hedging strategies during the pandemic, not underlying economics. Our services surplus is down 19%, but that is largely due to reduced tourism, travel, and transport. As other countries recover and reopen, we expect both imports and exports to improve substantially.

“Additionally, it is worth noting that our year-to-date goods deficit with China is down 16.5%, and is likewise down with Japan (34.7%), the EU 27 (7.7%), and Korea (7%). In the USMCA countries, the U.S. deficit with Canada is down 36% this year and Mexico’s surplus is slightly up due to their economic downturn’s effect on their demand for our exports.

“Overall, the Trump trade policy is working in spite of the virus. It is worth remembering that before the fallout from the pandemic, our goods trade deficit had been down from the previous year in five of the last six quarters, 7.2 million jobs had been created since the election — including over 510,000 manufacturing jobs — and median family income had increased by 6.8% in 2019, the largest increase in U.S. history.”

The Commerce report focused on manufactured goods and services. Exports of agricultural products to China increased, but critics have noted that China is still behind on its promises to buy agricultural products under the phase one agreement.

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