Tag Archives: U.S. trade deficit

The Impact Of The Tariffs

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On Wednesday, The American Thinker posted an article about the tariffs President Trump has put in place since he took office.

The article reports:

Far from igniting the inflationary firestorm predicted by his critics, Trump’s sweeping tariffs — including a 10% universal import duty and targeted hikes on 90 nations — have coincided with the lowest inflation rate since early 2021.

In a striking reversal of the narrative pushed by many economists, The Economist—a publication not known for its support of Trump’s policies — published a June 5 article acknowledging the muted inflationary effect of the tariff wave. The magazine pointed to hard data: in April, year-over-year inflation cooled to just 2.3%, far below the 0.8-point spike predicted by a University of Chicago survey of 48 economists.

Instead of tariff-fueled price hikes, the Bureau of Labor Statistics showed that prices for heavily impacted goods like clothing and new cars actually declined.

Car prices dropped by 0.5% from March to April, despite 25% tariffs on auto imports going into effect on April 3. Clothing prices remained flat through March — even as progressive economists sounded alarms. Far from passing on costs, many retailers and foreign producers appeared to absorb them, underscoring the competitive nature of global commerce in a post-pandemic landscape.

Even groceries — arguably the most politically sensitive prices of all — held steady through May, despite new duties on Canadian produce and other perishables. Consumers, in short, weren’t being punished at the checkout line.

Of course, none of this was supposed to happen.

The article concludes:

As the trade deficit narrows and the factory floors hum a little louder, it’s increasingly clear: this was no reckless gamble. It was strategy. And it’s working.

While some still mutter darkly about future price spikes, the facts on the ground are sobering — and for Trump’s critics, humbling. Inflation remains tame, shelves are stocked, and voters aren’t paying more to put dinner on the table. The tariffs are not only holding; they’re delivering.

This is what happens when a businessman instead of a politician becomes President. Can you imagine how much celebrating there would be in newsrooms if a Democrat had accomplished even half of what President Trump has accomplished? I am hoping that as Americans begin to realize the economic gifts they have received in the past six months, they will at least vote to keep control of Congress in the hands of the Republicans. That is the only way this success will continue.

Income From Tariffs

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On Friday, Zero Hedge posted an article about some of the impact of President Trump’s tariffs.

The article reports:

U.S. tariff revenues reached an all-time high in May as President Donald Trump’s trade policies started to fill government coffers.

According to the May 28 Daily Treasury Statement, revenues from “customs and certain excise taxes” climbed to a record high of $23.28 billion this month, up from $17.431 billion in April.

May was the first full month that Trump’s levies took effect. Most of the tax collections occurred on May 22, exceeding $16 billion.

Shortly after his April 2 “Liberation Day” announcement, the administration imposed 10 percent tariffs on nearly every country in the world.

Fiscal year-to-date—the federal government’s fiscal year runs from October 1 to September 30—tariff revenues total $93.85 billion.

Almost half of that revenue has been collected in April and May of this year.

The article concludes:

U.S. Trade Representative Jamieson Greer testifies before the Senate Finance Committee in the Dirksen Senate Office Building in Washington on April 8, 2025. Kayla Bartkowski/Getty Images

“All these things are on the table,” Greer said. “The reality is, we have this enormous trade deficit. It got worse over the Biden years, and if we don’t fix the global trading system, it’s just going to get even worse going forward. We have to fix it.”

According to the Census Bureau, the U.S. goods trade deficit narrowed sharply in April, declining to $87.6 billion. This is down 46 percent from the record high of $162.3 billion registered in March.

The article does mention that as companies move their manufacturing to America, the tariff income will decrease. However, as that happens, employment in America will increase, individual and corporate tax revenue will increase, and the expense of unemployment will decrease.

The tariffs are a part of the economy moving in the right direction.

Why Some Imported Products Are Cheaper

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There are a lot of reasons for the decline of manufacturing in America. Many of those reasons are related to trade deficits and the desire for cheap goods, but some are related to the cost of doing business in America. For better or worse, corporations in America who choose to operate within the law are required to pay their employees a minimum wage. We can debate over what that wage should be, but the fact of the matter is that a minimum wage exists. Some other countries have no qualms about employing slave labor or paying people very low wages. The Chinese have used Muslims as slave labor for years. So why would a manufacturing company want to locate in America? There are a number of incentives (in addition to the lowering of the corporate tax rate). America has dependable energy and is moving toward lowering the cost of energy. America protects property rights–the state cannot come in and simply take your business away. Innovation is also protected by patent and copyright laws. America represents a stable environment in which to do business. Changing the structure of tariffs also has moral component.

On May 12, The Federalist reported:

…But Trump’s tariffs were not just economic, they were moral. Rather than relying on foreign countries, particularly China, that benefit from abusive labor practices, Trump put America first by deciding the U.S. must stop pretending inexpensive products come with no human cost. 

…During Trump’s first term, his administration repeatedly highlighted human rights abuses abroad, especially in regions like China’s Xinjiang province, where the Chinese Communist Party is running forced labor camps filled with Uyghur Muslims. More than a million Uyghurs and other Muslims have been detained by China and sent to reeducation camps in what is called the “Xinjiang Uyghur Autonomous Zone” for a range of reasons, including attending religious services, having more than three kids, or texting verses from the Quran. 

China forced many of its religiously and ethnically targeted workforce to toil away in factories, making products distributed and sold across the globe. Muslim slaves in China produce countless store shelves worth of goods, according to the U.S. Department of Labor, such as textiles, hair products, and aluminum, among many other things. They get extremely low pay, can’t contact or visit their families (unless, in some circumstances, they are heavily surveilled by the government), and they can’t leave. 

The article concludes:

Yes, U.S. prices may go up a bit in the short term. Maybe American girls will find two dolls under the Christmas tree instead of 30, as President Trump suggested Sunday on Meet the Press. Maybe U.S. students will sharpen five pencils instead of hoarding 250 like mini office supply tycoons. But maybe underpaid workers in China won’t have to literally slave away making those dolls or pencils for someone else’s kid in a distant Land of the Free. 

President Trump believes temporary price fluctuations are a trade-off worth making in the interim, and he is doing what no other president had the guts to do. There is short-lived pain before lasting progress, and Trump is willing to take the heat now to put human rights and American prosperity over easy profits. 

The Economy Isn’t Really Roaring Along

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On Wednesday, The Gateway Pundit reported that the US trade deficit surged to over $109 billion in March. This is the first time the trade deficit has gone over $100 billion.

The article reports:

The U.S. trade deficit surged to a record high in March, confirming that trade weighed on the economy in the first quarter and could remain a drag for a while as businesses replenish inventories with imported goods.

The Commerce Department said Wednesday that the trade deficit accelerated 22.3% to $109.8 billion in March amid a record increase in imports. Economists polled by Reuters had forecast a $107 billion deficit.

The government reported last week that a record trade deficit sliced 3.20 percentage points from gross domestic product in the first quarter, resulting in GDP contracting at a 1.4% annualized rate after growing at a robust 6.9% pace in the fourth quarter.

There are a number of factors that have created this deficit.

In 2018, I reported the following (article here) (quoting from Reuters):

The United States now exports up to 1.7 million barrels per day of crude, and this year will have the capacity to export 3.8 billion cubic feet per day of natural gas. Terminals conceived for importing liquefied natural gas have now been overhauled to allow exports.

Below is a chart of American crude oil exports (source here):

Obviously the Biden administration’s war on fossil fuel has not only hurt the American economy, it has increased our trade deficit. It is time to put businessmen in Congress and in the White House.

Other factors include over-regulation by the government which generally has reduced manufacturing in America, the inflation caused by overstimulating the economy, and generally bad economic policies on the part of the Biden administration.