U.S. trade deficit reaches record high levels

The trade deficit of the United States has surpassed all-time records in recent weeks due to significant developments.

A ferry port in New York City, New York.

A report from the Department of Commerce showed that over the past few months, the United States made record imports from other countries, including Mexico, Vietnam, and even China. Quantitatively, the total value of imports rose to $419 billion, rising 4.4% from the previous record. The importation of capital goods, pharmaceuticals, and electronics rose, too. Yet, oil imports fell as domestic oil production did indeed rise.

This new data is worrying for the incumbent American administration, as well as the direction of the nation. President Trump, who previously called for a reduced trade deficit, enacted a series of reforms to the economic system from levying steep tariffs on foreign trade partners like China, to pressuring American companies to invest further into domestic production while reducing their reliance on foreign, untaxable subsidiaries, mergers, or acquisitions. Instead, the president's policies have contributed to quite the reverse impact on the economy; due to Trump's extremely high tariff rates, other nations have retaliated by raising tariffs of their own, preventing American exports from reaching the market and contributing to the trade deficit. In addition, the job exodus outside of the United States has been exacerbated as American manufacturers are now under pressure to invest in American industry while also grappling steep foreign tariffs on their goods, as well as cheap raw materials which they previously relied on. Subsequently, stock markets and the economy sank, and the so-called "bubble" which has plagued several economic disparities in previous decades has become thinner. In fact, economists are now rating chances of recession to the highest levels, with JP Morgan Chase raising their recession odds to 60%, meaning more likely than not. A vocal minority has affirmed that the economy will be fine, but the sheer size of the majority who are in belief that a recession is coming shows the general consensus that the state of the economy is getting worse.

In addition, this greater trade deficit is destined to hit Americans hard, first. The greater reliance on imports over exports will pressure companies at home to lay off employees and reduce wages, impacting Americans' incomes. In addition, consumer prices/inflation will only get worse as foreign tariffs prevent cheap goods from flowing into the domestic market. The devaluation of currency, notably the U.S. Dollar as more nations are inclined to abandon American economic leverage and Trump has become increasingly devoted to cutting rates, will hurt Americans' buying power.