Growing trade deficit shows US self-harm

Source:Global Times Published: 2018/9/28 22:13:42

Data released by the US Department of Commerce Thursday shows that because of declining exports of food, industrial supplies and automotive vehicles, the country's international trade deficit expanded to $75.8 billion in August, a record for the recent six months. Media around the world believe that US President Donald Trump's escalating trade war is dragging the US economy down.

The deeper deficit makes Washington's radical policymakers feel awkward. Tariffs did not stop the increasing trade deficit and the White House is feeling greater pressure for its misunderstanding of the nature and effects of tariffs.

Huo Jianguo, a research fellow at Chinese Academy of International Trade and Economic Cooperation, told the Global Times that a stronger US dollar contributed to about 30 percent of the deficit and the US economic recovery took up about up to 40 percent. The trade war formed the remaining 30 percent.

JPMorgan Chase & Co trimmed their estimates for third-quarter GDP growth after Thursday's data was released. The European Central Bank also said the US would have most to lose if it started a trade war with other countries, estimating that US growth would be cut by more than 2 percentage points.

The continuously deepening deficits in July and August have served as a rebuff to the radical trade policies of the US. Washington was seemingly expecting that China couldn't bear the pressure of a trade war. It was glad to see a Chinese stock market dip, believing that a US victory was in sight. But the US experts do not know China at all.

China was already prepared for the worst. China is marching toward a better future. Now it is the US that faces a challenge. Washington promised the American people that the trade war would be an overwhelming victory, but that was unrealistic.

We do not think that Washington will change its policy because of two months' data. It will take more time, more signs of economic downturn and more opposing views for the White House to change its attitude. But the laws of economics are more reliable. A trade war is a war of attrition in which both sides lose. As China pays its price, the US pays more.

Washington misunderstands the nature of a trade deficit. The Trump administration does not tell people the truth about a trade war and underplays the consequences.

Although China does not want a trade war, Beijing stays calm when needed and tries to minimize losses. China's attitude will stand the test of time.

Posted in: EDITORIAL

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