DC Report's David Cay Johnston takes a look at the impact of Trump’s trade war finding the US trade deficit has grown worse while China finds new suppliers and markets

DC Report's David Cay Johnston takes a look at the impact of Trump’s trade war finding the US trade deficit has grown worse while China finds new suppliers and markets

This article comes from DCReport and is used with permission.

By David Cay Johnston*

Reports are coming in from the first skirmishes in Donald Trump’s gratuitous trade war. They show our country is losing these early rounds of what China calls “the biggest trade war in economic history.”

“Trade wars are good and easy to win,” Trump declared in a March 2, 2018, tweet. So far that’s not how it’s gone.

Among the reports from the frontlines of this economic battleground is this gem - America’s trade deficit in goods has worsened significantly since the first of this year, Census Department data shows: Overall 7% worse. China 9% worse. Europe 16% worse.

China is not suffering either.

“China’s exports in July were up 12.2% over the prior year, ahead of market expectations,” noted David Dollar, an American trade emissary to China from 2009-13. “The International Monetary Fund’s (IMF’s) updated forecast for China’s GDP growth this year is 6.6%, above the target for the year.”

Contrast those robust Chinese economic indicators with the pain felt by American soybean farmers, hurt so much that Trump wants to send them $12 billion of welfare. At the same time, Brazilian soybean farmers are enjoying soaring prices as China relies on this new source for imported soybeans.

Then there’s Canada, America’s largest buyer of exported goods, mostly finished products that create lots of high-paying American jobs. Trump attacked Prime Minister Justin Trudeau, calling him in a June tweet “very dishonest and weak.”

Trump’s trade war began with two products from China, washing machines and solar panels. It now applies to 10,000 products.

Wars of all kinds have a nasty history of expanding, shifting and having unpredictable outcomes.

Whether Trump will pay any political price for the job losses, factory closings, falling soybean prices and other economic damage from launching a trade war on many fronts with no advance planning on how to win remains to be seen.

In the Missouri town of Poplar Bluff, near the Arkansas border, Trump’s steel tariffs may cause one of the largest local employers to go out of business. Already 60 of the 500 jobs at Mid Continent Nail Corp. have gone poof. But when journalist Melinda Henneberger spoke with some of the 17,000 residents about how Mid Continent was at risk of closing because of Trump’s trade war they said their support for Trump would not be swayed no matter what, not even by losing their livelihoods.

Nurse Carol McGee said, “It would be a detriment to our community. But when you look at the bigger picture, blaming him solely is not necessarily accurate.” Others agreed.

*David Cay Johnston is Editor-in-Chief of DCReport and a Pulitzer Prize winning US investigative journalist. He featured in this interest.co.nz video interview earlier this year. This article is the second in a three-part series in which David Cay Johnston examines the real effects of Trumponomics. The first article looked at wages.  The next article will address taxes.

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The analysis fails to explore the upsides which will see US manufactured products become increasingly more competitive on the domestic market.

Trump's trade war is about containing China's natural economic development and progression, and to maintain America's dominate position at all front, especially after reading the Made in China 2025 Report.

My opinion? Screw that! You cannot stop me from improving myself.


NZ is a very small country at the bottom end of the Pacific. What China does,or does not do,greatly affects us and most of us,me including me,know very little about the country.
I have been reading a lot in recent years to try and get a better understanding of China. In the South China sea,it is doing what other nations-including the UK and the US-have done before;that is extend its sphere of influence through a show of militarism. This makes other countries very nervous and if handled badly,can lead to real conflict.
However,though increasingly powerful both financially and militarily;corruption remains a significant issue,as does its debts. I have just read an interesting book on this-China's Great Wall of Debt,by Dinny McMahon. I can recommend it to you,along with the China Challenge by Thomas Christensen.

Americans are in serious trouble. You only need to try and engage most of them on gun reforms and you quickly find out they are a lost cause.They have been on a downward slope for decades but are so stubborn they don't bring about change to compensate. Its too late now, even slow change would take decades to come back and Trump is trying to do it in a single term, its not going to happen.