Tariffs are not the answer ... U.S. goods trade deficit hits a record in November 2021

Squire

Active member
17.5% in November 2021 is a steep jump in the trade deficit which was composed of both reduction of exports and an increase in imports. Given the reduction of exports, imports rose by more than 20%.

Tariffs are not the answer as they merely cause a rise in inflation and indeed may be counterproductive by countervailing tariffs against US goods and world public opinion turning negative against US products.

The real problem with the USA is that the US dollar does not respond to the reality of the trade balance because the flow of capital into the USA prevents the US dollar from falling. This is a distortion that can only be corrected by taxing capital inflow that is not for the purpose of financing the productive capacity of the US economy.

Taxing capital inflow also has the benefit of increasing tax revenue and reducing the budget deficit.

The trade balance will never be corrected without a tax on capital inflow.

https://www.cnbc.com/2021/12/29/us-goods-trade-deficit-hits-a-record-in-november.html

U.S. goods trade deficit hits a record in November
PUBLISHED WED, DEC 29 20219:04 AM EST
Reuters

The goods trade deficit widened last month by 17.5% to $97.8 billion from $83.2 billion in October, the Commerce Department said on Wednesday. That exceeds the previous record deficit set in September of $97 billion.
Goods exports declined 2.1%, while imports rose by 4.7%.
Trade has been a drag on gross domestic product growth for five straight quarters, while inventories added to output in the third quarter.

The U.S. trade deficit in goods mushroomed to a record in November as imports surged and exports slipped.

The goods trade deficit widened last month by 17.5% to $97.8 billion from $83.2 billion in October, the Commerce Department said on Wednesday. That exceeds the previous record deficit set in September of $97 billion.

Goods exports declined 2.1%, while imports rose by 4.7%.

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The report also showed wholesale inventories climbed 1.2% last month.

Retail inventories increased 2.0%.

Retail inventories, excluding autos, which go into the calculation of gross domestic product, edged up by 1.3%

The economy grew at a 2.3% annualized rate in the third quarter, a step-down from earlier in the year but activity has rebounded in the fourth quarter.

Trade has been a drag on gross domestic product growth for five straight quarters, while inventories added to output in the third quarter.
 
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