Was Trump wrong with the import tariffs? The facts speak!

The US trade deficit jumped to a five-month high in July after soybean and civilian airplane exports dropped and imports reached record highs. The dynamics of the trade deficit is greatest since 2015, suggesting that trade tariffs against China and Europe have had a negative impact on the country's exports.

If we narrow down and focus on trade deficit data for commodities sensitive to China's import tariffs, we will notice that there is also significant growth, at about 10% or $36.8bn. out of a total of $50.1 billion.

A large majority of Wall Street economists believe the US trade deficit will rise to $50.3bn. by the end of the year, which will also affect negatively the country's GDP.

However, the White House is in a different opinion, Donald Trump has defended his actions on imports of steel, aluminum and a number of Chinese goods as necessary to protect US industries from what he claims to be unfair foreign competition.

The administration says the elimination of the trade deficit will put the economy on a sustainable path for faster growth - an argument that economists have rejected.

No matter who is right, Trump or proven and not so economists, the facts are present and the prospect is not good at all. If the US deficit continues to rise, Trump will be forced to opt for or to observe a steady slowdown in GDP and hence sales of US and world stock indices.

In the last few minutes, we have seen good news on the US-Canada talks, but the real problem stems from the US-China relationship where negotiations seem to be lacking.

Source: CNBC

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