EnPresident Trump will sign an Executive Order today to require the Department of Commerce to identify all forms of “trade abuse” that contribute to the U.S. trade deficit, Reuters reports. This will look at a country- and product-level and take up to 90 days to complete. This would represent the implementation of one of the administration’s early pledges, as discussed in Panjiva research of January 17. The relatively slow implementation of what should be a relatively simple task – assuming the order calls for identification via data analysis rather than correction within that time period – would suggest policy delivery is proving more complex than the administration may have first expected.
Panjiva analysis shows that the major driver of U.S. deficit increases on a year earlier recently have been energy costs. For example in the past quarter to February 28 the deficit increased by $9.82 billion on a year earlier. However, excluding the change in energy costs it likely fell $4.5 billion. That effect is partly explained by an increase in exports – imports of food and capital goods have increased steadily for the past three months. It is easy enough to find specific targets. For example Mexican exports of certain semiconductors and non-cotton shirts can be easily identified from January’s data.
The danger of this “cherry picking” approach however is that while it will find new areas for self-initiated trade cases regarding imports, it may result in ad-hoc retaliation against U.S. imports. Some of these may not be obvious, for example as seen in the China-Russia food deal signed recently.
Source: Panjiva
