Trump at 1: 26 Trade Actions But The Deficit Keeps Rising — Panjiva


Trump at 1: 26 Trade Actions But The Deficit Keeps Rising

China 1793 European Union 414 India 287 Japan 386 South Korea 388 Tariffs 1205 Trade Deals 708 U.S. 3362 USMCA 378

One year on from the inauguration of President Trump it is probably not an exaggeration to say that trade has been the most active policy area for the administration. We have already identified seven key areas where the President can take action in the near term as part of our 2018 Outlook.

Yet, a review of 488 Panjiva research reports from the past 12 months that have mentioned President Trump’s impact on trade identifies 26 specific trade actions taken by the administration. These range from trade deals and cases to export-led Presidential roadshows. Broadly speaking the President has kept to his campaign commitments to redress America’s trade imbalance, but has yet to full deliver.

Trade Deals

On trade deals the President’s first action was to withdraw from the agreed, but not enacted, Trans-Pacific Partnership (1) as outlined in Panjiva research of January 23 2017. He has also made good on commitments to renegotiate the NAFTA (2) and KORUS (3) trade deals, though both are still some distance from completion. We continue to see a significant risk of withdrawal from NAFTA, while KORUS will only have a small review.

The commitment to launch bilateral trade deals has not yet made significant progress, other than with the Philippines in principle (4). There are formal economic dialogues with both Japan (5) and India (6) as well as a series of export deals agreed during the President’s November state visit (7) to Asia. The administration has taken multilateral action too though, teaming up with Japan and the EU to tackle “excess capacity” industries (8).

Relations with China remain in some doubt as the results of the section 301 review of China’s intellectual property practices (9) continues. There has, however, been a net deterioration in trade relations since the end of the comprehensive dialogue (10) that had initially (11) yielded $2.4 billion of new export arrangements.

One of the reasons for the worsened Chinese relations was the treatment of the country as an economic “enemy” within the National Security Strategy (12) that ties defense and trade explicitly together for the first time. A related review of the self-sufficiency of the defense industry (13) and supplies of critical minerals (14) also bring trade into broader industrial and security policies.

Trade Cases

“National security” has also played a part in the administration’s section 232 actions in the steel (15) and aluminum (16) industries that are close to completion (though originally they were committed for completion in June). The revival of the s232 measure was also echoed in the launch of section 201 “safeguarding” reviews of the washing machine (17) and solar panel (18) industries which would probably not have been petitioned under a less “trade-active” administration.

The administration also initiated its own “regular” section 701/731 reviews of imports of aluminum sheet (19) on top of the 16 petitions received from third parties that would have probably emerged anyway.

Trade Reviews and Executive Orders

The early days of the administration included the launch of several trade-related investigations and reports that have either not yet been published, or where progress is lagging. From an administrative perspective the Omnibus report (20) on causes of the trade deficit has not been publicly available, but has clearly informed trade actions elsewhere.

Related reviews of abuses within trade deals (21), enforcement of trade regulations (22) and the impact of “Buy American, Hire American” policies (23) have not yet been published while there does not yet appear to have been action on products used in U.S. pipelines (24).

The annual review of currency manipulation (25) by the U.S. Treasury was completed as planned, but did not formally label China as a currency manipulator.

Looking Ahead

The single biggest legislative success of the administration, tax reform (26), may actually have a detrimental impact on the trade deficit. As a reflationary fiscal measure the reform will lead to both increased consumer spending and corporate investment, which in turn will require additional imports.

In that regard the Trump administration has failed to deliver on its key metric for trade – reducing the trade deficit. The trade-in-goods deficit in the February-to-November was 7.2% higher than the same period a year earlier, Panjiva data for imports and exports shows. Similarly the total trade deficit, including the services surplus based on official data, rose 11.5% over the same period and breached $50 billion for a single month in November for the first time since January 2012.


Chart compares the U.S. goods deficit (exports less imports) to the total trade deficit including services. Calculations include U.S. Census Bureau data. Source: Panjiva

PANJIVA RESEARCH is a service provided by Panjiva, Inc. ("Panjiva") to relevant global subscribers, and are deemed to be Panjiva "Services" subject to the Panjiva Terms & Conditions of Use. Information contained within or made available via the Services is for informational purposes only and nothing in the Services shall constitute or be construed as an offering of financial instruments, or as investment advice or recommendations by Panjiva, Inc. or its affiliates of an investment strategy or whether to "buy", "sell" or "hold" an investment. The Services may include views and commentary about customers of Panjiva. No aspect of the Services is based on consideration of your individual circumstances, and you should determine on your own whether you agree with the information contained within or made available via the Services. Employees involved in Panjiva Research may hold positions in securities analyzed or discussed in the Services. Panjiva does not make any express or implied warranties, representations, endorsements or conditions with respect to the Services and the information contained within or made available via the Services, including without limitation, warranties as to the usefulness, completeness, accuracy, currentness, reliability or sufficiency of any information (including, without limitation, conclusions, statements, opinions, estimates, forecasts or projections of any kind) and expressly disclaims any implied warranties. Neither this disclaimer nor any of its contents may be forwarded or redistributed without the prior written consent of Panjiva. © 2019 Panjiva, Inc. All Rights Reserved.